OCBC Bank: Reduced political uncertainty in Japan may pave the way for a Bank of Japan rate hike in October

Jinse Finance reported that Christopher Wong, a foreign exchange strategist at OCBC Bank Singapore, stated that after the Japan Innovation Party agreed to form a coalition government, Sanae Takaichi's election as Japan's Prime Minister was within expectations. The fiscal prudence demonstrated by the coalition between the Liberal Democratic Party and the Japan Innovation Party should reassure both the market and the yen. The impact of this event on the USD/JPY may not be similar to the trend seen after the Liberal Democratic Party's election, as the coalition government may require Sanae Takaichi to adjust her previously supportive stance on stimulus policies. In addition, since the macro environment allows for policy normalization, a reduction in political uncertainty may pave the way for the Bank of Japan to raise interest rates on October 30.