Goldman Sachs: If the yen approaches 130, the Bank of Japan may consider stopping interest rate hikes
2025-04-14 06:46:45
The Bank of Japan may consider pausing interest rate hikes if the yen rises to 130 against the dollar and the outlook for sustained inflation in Japan dims, according to Goldman Sachs analysts. Goldman Sachs economists led by Akira Otani wrote that a sharp appreciation in the yen could squeeze Japanese exporters' profits, depress import prices, dampen domestic investment and weaken wage growth, posing a challenge for the Bank of Japan to continue tightening. They also said that if the yen strengthens to a low of more than 130 against the dollar, the Bank of Japan may cut its inflation forecast for fiscal 2026 to around 1.5 percent, below its 2 percent target. Conversely, if the yen falls below 160 - the level that triggered the Bank of Japan to raise interest rates last July - the Bank of Japan may consider further or accelerated rate hikes. (Jin Ten)
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