Citi: Yen Weakness Could Lead Bank of Japan to Hike Three Times by 2026
BlockBeats News, January 20th. Citi Japan's market business leader Akira Hoshino said that if the yen remains weak, the Bank of Japan may raise interest rates three times this year, doubling the rate level. Hoshino said in an interview that if the USD/JPY exchange rate breaks 160, the Bank of Japan may raise the unsecured overnight call rate by 25 basis points to 1% in April.
He believes that if the yen exchange rate remains low, a second rate hike of the same magnitude may be possible in July, and even a third rate hike may be possible before the end of the year. "Simply put, the yen's weakness is being driven by negative real interest rates," Hoshino said. "If (the Bank of Japan) wants to reverse the exchange rate trend, they have no choice but to address this issue." Currently, Hoshino expects the yen to fluctuate this year in a range slightly below 150 to 165. (FXStreet)
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