Citi: Yen weakness may lead the Bank of Japan to raise interest rates three times in 2026

DeepFlowTech · 2026-01-20T00:36:16+00:00

Citigroup Japan Market Head Akira Hoshino stated that if the yen continues to weaken, the Bank of Japan may raise interest rates three times this year, doubling the rate level. It is expected that the USD/JPY exchange rate may break through 160, prompting a 25 basis point rate hike in April, with further rate hikes possible within the year to counteract the weak yen.

DeepFlowTech

2026-01-20 00:36:16

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Deep Tide TechFlow News, January 20 — According to Jinshi Data, Hoshino Akira, head of Citi Group’s Japan market business, stated that if the yen remains weak, the Bank of Japan may raise interest rates three times this year, doubling the current rate. In an interview, Hoshino said that if the USD/JPY exchange rate breaks through 160, the Bank of Japan might raise the unsecured overnight borrowing rate by 25 basis points in April, to 1%. He believes that if the yen remains at a low level, a second rate hike of the same magnitude could occur in July, and possibly a third before the end of the year. “Simply put, the yen’s weakness is driven by negative real interest rates,” Hoshino said. “If the Bank of Japan wants to reverse the exchange rate trend, there is no other choice but to address this issue.” Currently, Hoshino expects the yen to fluctuate within a range slightly below 150 to 165 this year.

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