Citi Warns of Potential BOJ Rate Hikes Amid Yen Weakness
Citigroup's Head of Markets in Japan, Akira Hoshino, predicts the Bank of Japan (BoJ) could raise interest rates by 300 basis points this year if yen weakness persists. A surge beyond ¥160 against the dollar may trigger an immediate 25bps hike to 1% in April, with two additional hikes possible by year-end.
The yen's decline stems from negative real interest rates, where yields lag inflation. Hoshino urges BoJ action but notes success depends on the central bank's willingness to alter exchange rate dynamics. Market participants debate whether Japan's ultra-loose monetary policy can withstand global inflationary pressures.