BOJ Eyes April Rate Hike on Yen Weakness Risks

Some Bank of Japan policymakers are considering interest rate increases as early as April, ahead of market expectations, as the weakening yen heightens risks of broader inflationary pressures, according to sources familiar with the central bank's deliberations. The potential move comes amid fresh warnings from Japanese officials about possible currency intervention to counter excessive yen depreciation, which recently pushed the currency to an 18-month low against the dollar.

The Bank of Japan is set to conclude its two-day policy meeting on January 23, where it is expected to maintain its benchmark interest rate at 0.75 percent, the highest level in 30 years following a December hike. Four sources with knowledge of the bank's internal discussions, speaking on condition of anonymity, indicated that while no immediate action is planned, several policymakers view April as a viable window for further tightening if evidence mounts that Japan can sustainably achieve its 2 percent inflation target. This timeline contrasts with private-sector forecasts, where a Reuters poll of analysts points to a next hike in July and rates reaching 1 percent or higher by September.