The BoJ is getting closer to pulling the trigger to end its negative interest rate policy (NIRP). We believe the BoJ 2% inflation goal is clearly in sight, factoring in the latest inflation data and risks (as well as other events) on the horizon. We expect the BoJ to end its Yield Curve Control (YCC) policy at the Dec'23 meeting and exit NIRP in Jan'24 with a 10 bps hike in the policy balance rate.

Our accelerated timeline for BoJ normalization reinforces our out-of-consensus USD/JPY forecast, which sees a push towards 135 in early 2024.