Bank of America anticipates the Bank of Japan will keep its policy rate unchanged at 0.5% when it concludes its 30–31 July meeting, warning that current market expectations for a near-term hike—particularly in October—may be overly optimistic. A lack of hawkish signals could disappoint yen bulls, especially against the backdrop of ongoing political and trade-related uncertainty.Highlights:No July Move Expected: BoA does not expect any policy changes at this meeting, with the BoJ likely to maintain its cautious stance.Hike Expectations Overstated: Market pricing currently reflects a roughly 25% chance of a rate hike in September and 65% by October. BoA believes this is too aggressive and sees scope for a repricing.Trade Deal Doesn’t Remove Risk: Despite the recent US-Japan trade agreement, the central bank is expected to maintain a cautious tone, highlighting potential downside risks from lingering tariffs and external demand concerns.Downside Risk for JPY Bulls: The risk of a dovish surprise is elevated. If the BoJ offers little to support tightening expectations, it could weigh on the yen, particularly given Japan’s political uncertainty.Bottom Line: Bank of America expects the BoJ to lean dovish, cautioning that aggressive rate hike bets—especially for October—may not be validated. That could leave the Japanese yen vulnerable and open the door for further upside in USD/JPY if the BoJ underdelivers. ---Earlier:BOJ expected to hold rates steady, offers cautious optimism as trade headwinds easePreview - BOJ to hold rates this week, may signal future hikes as outlook improvesThe BoJ does not have a firmly scheduled time for publishing its statement or outlook report.expect the announcements sometime in the 0230 - 0330 GMT time window (2230-2330 US Eastern time) This article was written by Eamonn Sheridan at investinglive.com.