BOJ may raise rates in March if yen resumes slide, says ex-policymaker

Core Viewpoint - The Bank of Japan (BOJ) may raise interest rates as early as March if the yen continues to decline, particularly ahead of a U.S.-Japan summit [1][2] Group 1: Interest Rate Decisions - Former BOJ board member Makoto Sakurai indicated that Prime Minister Takaichi may request the BOJ's assistance in stabilizing the yen, as the U.S. has shown a preference for a stronger yen against the dollar [2] - Sakurai suggested that the BOJ could justify a rate hike in March by citing potential strong wage growth from upcoming annual spring wage negotiations [3] - The current policy rate stands at 0.75%, and Sakurai anticipates the BOJ may need to increase rates to 1.75% by 2026 and 2027 to maintain economic balance [5] Group 2: Economic Implications - A further decline in the yen could lead to increased inflation due to higher import costs, which may counteract the effects of government fuel subsidies [3] - Economists surveyed by Reuters predict the BOJ will raise rates to 1% by the end of June, with markets estimating a 70% chance of a hike by April [7] - The BOJ ended a long-term stimulus program in 2024 and has already raised rates multiple times, with the most recent increase in December marking a 30-year high for the short-term policy rate [6]