What is the Bank of Japan's next policy decision date?

The Bank of Japan's next policy decision is scheduled for January 23.

How is the weak yen affecting inflation in Japan?

The weak yen increases inflation by making imports more expensive, and businesses are increasingly passing these higher costs to consumers.

Will the Bank of Japan raise interest rates soon?

While a rate hold is expected in January, the weak yen may prompt the Bank of Japan to accelerate future rate hikes.

Home / Business and Economy / Weak Yen Could Accelerate Japan's Next Rate Hike

Weak Yen Could Accelerate Japan's Next Rate Hike

15 Jan

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Summary

Bank of Japan officials watch yen's inflation impact.
Rate hold expected Jan. 23, but future hikes may shift.
Businesses increasingly pass import costs to consumers.

Weak Yen Could Accelerate Japan's Next Rate Hike

Bank of Japan officials are increasingly focused on the yen's impact on inflation, which could influence the timing of future interest rate adjustments. A rate hold at 0.75% is widely expected for the upcoming policy decision on January 23, maintaining the highest rate in three decades. However, persistent yen depreciation is prompting discussions about potentially accelerating subsequent rate hikes beyond the current summer projection.

The depreciating yen is becoming a significant factor as businesses show a greater inclination to pass on elevated input costs to consumers. This trend is pushing underlying inflation closer to the BOJ's 2% target. Officials are assessing the negative repercussions of a persistently weak yen on the economy, noting that the bank has room to continue raising rates and should prioritize timely policy execution.

Recent yen weakness has persisted despite a December rate hike, with the currency recently hitting an 18-month low against the dollar. Business leaders have voiced concerns, with one suggesting government intervention to halt excessive depreciation. A weaker yen inflates import costs while boosting exporter profits, creating complex economic dynamics.