Overview
- The Bank of Japan is expected to keep its policy rate at 0.75% on Friday while signaling readiness to raise rates further.
- Sources cited by Reuters say an April hike is possible if the currency stays weak, even though most economists still expect the next move around July.
- Citigroup’s Akira Hoshino outlines a scenario where a break above USD/JPY 160 could prompt hikes in April and July with a potential third move by year-end, framing this as contingent on persistent yen weakness.
- Prime Minister Sanae Takaichi’s call for a February snap election and her pledges of fiscal loosening have added to inflation risks as 10-year JGB yields hit roughly 2.30%.
- The yen has fallen about 8% since October, briefly touching near 159.45 last week before stabilizing around 158.18, keeping focus on Governor Kazuo Ueda’s post-meeting guidance.