Japan uses interest rate hikes in exchange for tariff concessions, even a 'mini Mar-a-Lago agreement'? Focus on next week's meeting of the finance ministers of the U.S. and Japan.
The discussion between the finance ministers of the USA and Japan next week may become a turning point for the yen Exchange Rates. Citigroup believes that if the USD/JPY Exchange Rates remain above 140, the Bank of Japan may accelerate the tightening of MMF policy under pressure from the USA. Considering the current inflation and interest rate levels in the USA, it is not yet mature to reach a "mini Mar-a-Lago agreement"; a more realistic solution is for the Japanese government to extend its MMF holdings of US Treasury bonds, contributing to a decline in US interest rates.
Japanese bonds have fallen to their lowest point since 2009! The Governor of the Bank of Japan reiterates the determination to 'reduce the balance sheet' and holds an optimistic view on salary prospects.
Kazuo Ueda stated, "From now on, we may see inflation easing driven by import costs, while wages will continue to rise steadily. Therefore, we expect real wages and Consumer spending to improve in the future." The Bank of Japan has also begun to implement an Algo tightening plan, with the monthly purchase of Bonds expected to be halved to 3 trillion yen by early 2026.
ReYuu Japan ETC
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Express News | BOJ Increases Short-Term Interest Rate Target to 0.5% (Est. 0.5%), Highest Level in 17 Years. Following the Decision, Nikkei 225 Up 0.6%, USDindex Down 0.2%.
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