Credit Agricole CIB Research on BoJ rates outlook.

Even if the BoJ raises rates, the yield curve would flatten, but long-term yields will not decline unless the economy deteriorates significantly. If the BoJ hikes in September and October, real GDP growth in 2027 would likely slow further to around +0.5%, in line with potential growth, from +0.8% in 2026. A slowdown in growth would put downward pressure on the yen," CACIB notes.

"It should not be forgotten that even as the BoJ has continued its overeager rate hikes, yen depreciation and rising long-term rates have persisted," CACIB adds.