BoJ preview: A lot can change in a month

We expect the BoJ Policy Board to deliver a 25bp hike to 1.25% at its 17-18 September MPM, as widely expected, with a September hike fully priced by markets. Key watchpoints are the vote count, language changes in the policy statement, and Governor Ueda's press conference. Markets will be looking for validation that the BoJ indeed intends to accelerate the pace of hikes, not just at this meeting but over the next year. Our view is that the BoJ continues to hike at a roughly quarterly pace, with three additional 25bp moves in December 2026, March 2027 and July 2027, taking the policy rate to a terminal of 2%. In rates, with September fully priced, we recommend selling 6m1y payer 1x2. In FX, a quarterly rate-hike path is reinforced in action with limited scope for disappointment, and we maintain our recommendation to stay short USD/JPY.