BlockBeats News, March 6th – Former Bank of Japan official in charge of monetary policy, Eiji Maeda, stated that despite the new uncertainty brought by the Iran conflict, the Bank of Japan is still about 50% likely to raise interest rates next month after keeping rates unchanged in March. He said, “The next rate hike is likely to occur in April or June. Considering the current uncertainty, these two possibilities are roughly equal. This is an extremely difficult situation for the Bank of Japan.”
He mentioned that due to the increasing risk of falling behind inflation, a rate hike in April would be more prudent. His view is in line with market expectations, as overnight index swaps indicate a market consensus of about 60% probability of a rate hike in April. Maeda pointed out, “If the Bank of Japan does not act in April, the yen may weaken further. If it breaks 160 against the US dollar, the risk of lagging behind the market trend will increase.” Even at the current level, the yen is already “quite weak,” and a slight pullback would be more comfortable for Japanese businesses and households. (FXStreet)
