The Bank of Japan is expected to announce an additional rate hike today, with the rate set to rise by 0.25 percentage points to 1.25%. Attention is focused on Governor Ueda's next move, while concern is mounting over developments in the yen and bitcoin.
The prevailing market view is that the Bank of Japan will raise its current 1.00% rate to 1.25% today. The Federal Reserve decided unanimously to raise rates the previous day, and monetary policy in both Japan and the United States is expected to continue moving toward tightening around the same time.
The focus has shifted from the rate hike itself to how strongly Governor Kazuo Ueda (植田和男) will signal further rate hikes at his press conference. If the Japan-US interest rate differential remains largely unchanged, the yen could see a lack of further market reaction, and either yen depreciation or appreciation is considered possible.
Three scenarios have been identified for the yen exchange rate: a case in which further rate hikes are clearly signaled, a case in which a cautious stance is maintained, and a case in which rates are left unchanged. The current range is reported to be approximately ¥155.88 to ¥156.32 per dollar.
The report also addresses the risk that an unwinding of yen carry trades could spread to global markets, as well as the channels through which bitcoin could be affected. Developments in both dollar- and yen-denominated bitcoin are considered key to the outlook. Bitcoin was trading at around $76,353 during the FOMC meeting, with a market capitalization of approximately $1.53 trillion and trading volume of approximately $31.1 billion, according to reports.