pinballgarage| Japan, big news! The Bank of Japan releases a heavy signal! The Bank of Japan may raise interest rates as concerns intensify in Japan about a sharp yen depreciation

The Bank of Japan sends out a heavy signalPinballgarage!

Kazuo Ueda, governor of the Bank of Japan, revealed in his latest speech that Japan's monetary policy will remain loose for some time, but the Bank of Japan will scale back its bond purchases at some point in the future. The market is more concerned about whether the Bank of Japan will raise interest rates ahead of time. Kazuo Ueda said recently that the Bank of Japan is likely to raise interest rates as domestic concerns about the rapid depreciation of the yen grow.

It is clear that the greater pressure on the BoJ now comes from the yen. The yen has plummeted this week and has now fallen below the 154 mark against the dollar, its lowest level against the dollar since June 1990. Japanese economists believe that in the context of the recent rapid depreciation of the yen, the Bank of Japan should raise interest rates in advance.

An important reason for the rapid depreciation of the yen is that the dollar continues to strengthen. Due to the higher-than-expected inflation data in the United States, the timing of the Fed rate cut was further delayed. Persistent inflation is seen as the number one risk to financial stability, according to the Fed's latest semi-annual financial stability report.

The Bank of Japan suddenly

April 20 news, Bank of Japan Governor Kazuo Ueda said that Japan's monetary policy will remain loose for a period of time, policy makers will continue to buy government bonds.

On April 19, US Eastern time, Kazuo Ueda said publicly at the Peterson Institute for International Economics in Washington that the Bank of Japan would scale back its bond purchases at some point in the future.

But Mr Ueda added that the BoJ considered it "dangerous" to withdraw intervention in bond markets altogether in March, when it raised interest rates for the first time in 17 years and ended its yield curve control programme.

Kazuo Ueda said the BoJ would proceed with caution, noting that it could raise interest rates further if the underlying price trend improved.

Kazuo Ueda explained the BoJ's policy shift in March, saying that the strongest wage rise in decades had helped improve the chances of the BoJ meeting its price targets and justified the policy shift.

In an interview earlier this month, Kazuo Ueda stressed the possibility of an improvement in inflation trends, hinting that interest rates could rise in the second half of this year. Economists believe that the recent accelerated depreciation of the yen may advance this timetable.

Core inflation has remained at or above the 2 per cent target set by the BoJ for two years in a row, but the BoJ said it still thought it was some way off to achieve that target in a sustainable manner.

But Mr. Ueda did not disclose more about the timetable for the next rate hike.

About 41% of economists surveyed expect the BoJ to raise interest rates again in October, according to a Bloomberg survey. With the exception of one economist, 54 economists do not expect a change in policy at next week's BoJ meeting.

Kazuo Ueda said that the policy shift of the Bank of Japan and recent developments in the foreign exchange market had been a hot topic of discussion with other officials in Washington.

Japanese Finance Minister Suzuki Shunichi and senior Japanese foreign exchange official Makoto Kanda expressed concern about the weakening yen in Washington this week, which market participants see as a way to lay the groundwork for currency intervention.

The pressure of the yen

At present, the greater pressure on the BoJ may come from the yen.

The yen has plummeted this week and has now fallen below the 154 mark against the dollar, its lowest level against the dollar since June 1990.

Analysts believe that mainly because the market expects the spread between Japan and the United States to continue to widen, although Japanese government officials have stepped up verbal warnings, they have been unable to stop the market from frantically selling the yen.

Japanese officials had been expected to intervene once the dollar broke through 152 against the yen, but so far there has been no clear sign that Japanese regulators have acted.

As a result, large amounts of international capital continue to increase their short bets on the yen, with hedge funds raising their bets against the yen to their highest level since January 2018, according to the latest report.

JPMorgan Chase and Bank of America have seen the yen's fall to 160, a 34-year low, as the next milestone.

Daisaku Ueno, foreign exchange strategist at Mitsubishi UFJ Morgan Stanley Securities, said that without intervention, the yen could fall to 160.Pinballgarage.20, the level of April 1990.

In response, Kazuo Ueda also warned that a weak yen could affect inflationary trends if this could lead to a policy shift, which attracted widespread concern in March.

Japanese economists believe that in the context of the recent rapid depreciation of the yen, the Bank of Japan should raise interest rates in advance.

Speaking in Washington on Thursday local time, Kazuo Ueda said the Bank of Japan may raise interest rates to curb inflation triggered by a weaker yen amid growing concerns in Japan about the rapid depreciation of the yen.

But there is bad news about Japanese inflation.

Japan's inflation rate fell in March from the previous month as prices of non-fresh food and accommodation slowed, setting some obstacles to the BoJ's prospect of raising interest rates, according to the latest data released by the Ministry of Foreign Affairs.

The data showed that Japan's CPI rose 2.7 per cent in March from a year earlier, slightly below economists' median forecast of 2.8 per cent and the previous figure of 2.8 per cent.

A strong dollar

An important reason for the rapid depreciation of the yen is that the dollar continues to strengthen. Because the higher-than-expected US inflation data may further delay the Fed's rate cut, some Fed officials have even warned that if the data show that the Fed needs to raise interest rates to meet its target, then the Fed will raise interest rates.

At a critical moment, the Fed's latest report also sent a red flag.

On April 19, local time, the Federal Reserve released its semi-annual financial stability report, saying that persistent inflation was regarded as the number one risk to financial stability.

The Fed believes that, in the view of market participants and observers, persistent inflation has led to higher-than-expected interest rates and is seen as the biggest threat to financial stability. "persistent inflationary pressures have led to a tighter-than-expected monetary policy stance, which remains the most frequently mentioned risk."

The report shows that Fed officials are beginning to be skeptical about the downward trend in inflation and note that the pace of interest rate cuts may not be as fast as expected.

In addition, the report also mentioned that the leverage ratio of hedge funds has reached at least a new high since 2013, geopolitical issues, and the 2024 U.S. presidential election.

Analysts believe that there are signs that the Federal Reserve may maintain high interest rates for a longer period of time, and the strength of the dollar may continue. This will undoubtedly put huge depreciation pressure on the yen and may further pressure the Bank of Japan to consider raising interest rates in advance.

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