Citigroup: Weakness of Japanese yen may prompt Bank of Japan to raise interest rates three times this year

Akira Hoshino, head of Citigroup's Japan market business, said that if the yen continues to weaken, the Bank of Japan may raise interest rates three times this year, doubling the level of interest rates. He pointed out that if the exchange rate of the US dollar against the Japanese yen breaks through 160, the Bank of Japan may raise the unsecured overnight lending rate by 25 basis points to 1% in April, and may carry out the second and third interest rate hikes before July and the end of the year respectively. Hoshino believes that the weakness of the yen is driven by negative real interest rates, and if the Bank of Japan wants to reverse the trend of the exchange rate, it needs to address this issue. He expects the Japanese yen to fluctuate within the range of 150 to 165 this year.