The Bank of Japan may raise interest rates in the coming months. In recent statements, the bank said a weaker yen could increase inflation and is preparing markets for future changes.
Last week, BOJ statements linked inflation risks to the weakening yen. Meetings between Prime Minister Sanae Takaichi and BOJ Governor Kazuo Ueda reduced political resistance and opened the way for a possible rate increase. Decisions by the U.S. Federal Reserve may also affect the yen’s movement.
The bank has kept rates stable after raising them to 0.5% in January. However, a weaker yen and rising wages are increasing inflationary pressure, raising the likelihood of a rate hike.
Experts say that raising rates could slow the yen’s decline and help control inflation. This reduces market confidence that rates will remain low for a long time.
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