Former Bank of Japan official: The probability of the Bank of Japan raising interest rates in April is still about 50%
Former Bank of Japan official Eiji Maeda, responsible for monetary policy, stated that despite the new uncertainties brought by the Iran conflict, the probability of an interest rate hike next month remains around 50% after the Bank of Japan kept rates unchanged in March. He said, "The next rate hike is likely to occur in April or June. Given the current uncertainties, both possibilities are roughly equal." For the Bank of Japan, this is an extremely difficult situation.
He mentioned that an April rate hike would be more prudent due to the rising risks of inflation lagging. His view aligns with the general market expectation, as the overnight swap market indicates that traders believe the likelihood of a rate hike in April is about 60%. Maeda pointed out, "If the Bank of Japan does not act in April, the yen may weaken further. If it breaks above 160 against the dollar, it will increase the risk of lagging behind market trends." Even at current levels, the yen is already "quite weak," and a slight adjustment would be more comfortable for Japanese companies and households.
-- Price
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