The Japanese yen is at 24-year lows. Here's what to expect at the next BOJ meeting

The Japanese yen is hovering adjacent to its weakest levels since 1998, and authorities person hinted astatine taking enactment to stem the currency's decline.

Ahead of Bank of Japan's complaint determination aboriginal this week, CNBC takes a look astatine whether Japan's cardinal slope mightiness displacement from its ultra-loose monetary policy, arsenic the Federal Reserve maintains its hawkish stance, signaling much assertive complaint hikes to come.

The widening complaint differential has caused the yen to weaken significantly, with the Japanese currency falling astir 25% year-to-date.

Last week, the Bank of Japan reportedly conducted a overseas speech "check," according to Japanese paper Nikkei – a determination mostly seen arsenic preparing for ceremonial intervention.

The alleged check, arsenic the Nikkei explained, involves the cardinal slope "inquiring astir trends successful the overseas speech market" and is wide seen arsenic a precursor to physical involution to support the yen.

Despite speech of a carnal involution successful the forex markets, analysts are each pointing to different crushed down the weakening yen: the Bank of Japan's yield curve power (YCC) policy — a strategy that was implemented successful 2016, which caps 10-year Japanese authorities enslaved yields astir 0% and offers to bargain unlimited magnitude of JGBs to support an implicit 0.25% headdress astir the target.

The output curve power argumentation aims to bring ostentation successful Japan to a 2% target. On Tuesday, Japan reported that halfway ostentation roseate 2.8% from a twelvemonth agone successful August, the fastest maturation successful astir 8 years and the 5th consecutive period wherever ostentation exceeded the BOJ's target.

HSBC's Senior Asia FX Strategist Joey Chew said defending this argumentation would beryllium the cardinal bank's precedence alternatively of a currency intervention, which would beryllium decided by the Ministry of Finance, and carried retired by the Bank of Japan.

"The BOJ volition beryllium conducting enslaved purchases – theoretically unlimited – to support its output curve power policy," Chew said, adding specified monetary operations would beryllium somewhat contradictory to immoderate imaginable overseas speech action, fixed dollar-yen income would tighten the Japanese currency's liquidity.

"Talk of FX involution astatine this juncture whitethorn not person a worldly impact," said Chew. "Even existent involution whitethorn lone pb to a ample but short-lived reaction."

Chew pointed to limitations from erstwhile instances erstwhile Japan stepped successful to support its currency.

Strategists astatine Goldman Sachs besides don't spot the cardinal slope shifting from its output curve power policy, pointing to its hawkish planetary peers.

"Our economists expect the BOJ to firmly support its committedness to YCC argumentation astatine this week's gathering against a backdrop of 5 different G10 cardinal banks that are each apt to present ample complaint hikes," they said successful a note.

Goldman Sachs says though nonstop involution should beryllium much apt with reports of complaint checks, economists spot the accidental of a palmy cognition successful defending the yen arsenic "even lower."

Monetary argumentation changes by Japanese authorities arsenic unlikely, chances being particularly debased nether BOJ politician Harukiho Kuroda, said UBS Chief Economist for Japan Masamichi Adachi.

"One anticipation that they would present is amending its existent neutral to dovish guardant guidance to conscionable neutral oregon deleting it," helium said, adding the probability is astatine maximum 20% to 30%.

One of the archetypal indicators successful a displacement successful Japan's monetary stance would beryllium stepping distant from Prime Minister Fumio Kishida's predecessor Shinzo Abe's economical policy, wide referred to arsenic Abenomics, according to Nomura.

"The archetypal indispensable measurement toward normalization would beryllium for Prime Minister Kishida to amusement that his argumentation precedence has present diverged distant from Abenomics, and helium volition nary longer tolerate further yen depreciation," said Naka Matsuzawa, main Japan macro strategist astatine Nomura.

The Bank of Japan's adjacent two-day monetary argumentation gathering concludes connected Thursday, 1 time aft the U.S. Federal Open Market Committee meeting, wherever officials are wide expected to hike involvement rates by different 75 ground points.