[MacroImpact] Potential Rate Hikes by Japan's Central Bank Amid Yen Weakness

On January 20, Akira Hoshino, head of Citigroup's Japan market operations, suggested that the Bank of Japan might raise interest rates three times this year if the yen continues to weaken. According to BlockBeats, Hoshino indicated in an interview that should the dollar-yen exchange rate surpass 160, the Bank of Japan could increase the unsecured overnight call rate by 25 basis points to 1% in April. Hoshino believes that if the yen remains at a low level, a second rate hike of the same magnitude could occur in July, with a possible third hike by the end of the year. "Simply put, the yen's weakness is driven by negative real interest rates," Hoshino stated, "If the Bank of Japan wants to reverse the exchange rate trend, it has no choice but to address this issue." Currently, Hoshino expects the yen to fluctuate within the range of slightly below 150 to 165 this year.