Kazuo Momma, the former executive director of the Bank of Japan, said the probability that the central bank would raise rates for the second consecutive month at the October policy meeting is about 20% to 30%, earlier than most economists had expected.
But the probability figures are not the main point. He expects the Bank of Japan to bring rates to around 2% in June and July next year. Starting from the 1.25% rate just raised in September, that would imply there may still be three more 25-basis-point hikes ahead. The normal cadence is once every three months, but he believes the likelihood of rate hikes at two consecutive meetings is quite high. The intention is to prime the market in advance: the pace of tightening could be faster than people think.
The rationale is the risk that core inflation remains above 2%. He believes this risk will not ease over the next three months, but will grow. This is consistent with Japan’s rate-hiking path over the past year and more—continuously tightening all the way to the current 1.25%, a level not seen in 31 years.
The link to the crypto market is this: the yen has, for years, been one of the cheapest funding currencies globally. Many leveraged funds borrow low-interest yen to buy highly volatile risk assets. Once the cost of yen funding is repriced, it’s often not the Japanese domestic market that breaks first, but the positions propped up by cheap-yen leverage. The global risk-off triggered by the unwind of the 2024 yen carry trade is a textbook example of this mechanism.
This is a retired official’s personal assessment, not a policy commitment from the Bank of Japan. The 20% to 30% figure itself also leaves substantial uncertainty. But the path he lays out—terminal rate of 2%, with the possibility that rate hikes could accelerate—is more worth putting on your own risk checklist than simply guessing whether the Bank of Japan will raise rates in October.
The above is for subjective analysis only and does not constitute investment advice.
#日本加息 #本周Strategy与Strive增持2305枚BTC
But the probability figures are not the main point. He expects the Bank of Japan to bring rates to around 2% in June and July next year. Starting from the 1.25% rate just raised in September, that would imply there may still be three more 25-basis-point hikes ahead. The normal cadence is once every three months, but he believes the likelihood of rate hikes at two consecutive meetings is quite high. The intention is to prime the market in advance: the pace of tightening could be faster than people think.
The rationale is the risk that core inflation remains above 2%. He believes this risk will not ease over the next three months, but will grow. This is consistent with Japan’s rate-hiking path over the past year and more—continuously tightening all the way to the current 1.25%, a level not seen in 31 years.
The link to the crypto market is this: the yen has, for years, been one of the cheapest funding currencies globally. Many leveraged funds borrow low-interest yen to buy highly volatile risk assets. Once the cost of yen funding is repriced, it’s often not the Japanese domestic market that breaks first, but the positions propped up by cheap-yen leverage. The global risk-off triggered by the unwind of the 2024 yen carry trade is a textbook example of this mechanism.
This is a retired official’s personal assessment, not a policy commitment from the Bank of Japan. The 20% to 30% figure itself also leaves substantial uncertainty. But the path he lays out—terminal rate of 2%, with the possibility that rate hikes could accelerate—is more worth putting on your own risk checklist than simply guessing whether the Bank of Japan will raise rates in October.
The above is for subjective analysis only and does not constitute investment advice.
#日本加息 #本周Strategy与Strive增持2305枚BTC