Mitsubishi UFJ Says Japan May Need Jumbo Rate Hike to Boost Yen

Mitsubishi UFJ Asset Management warned that a larger or out-of-cycle Bank of Japan rate hike cannot be ruled out, implying the expected hike later this month may be insufficient to stop further yen weakness and declines in Japanese government bonds. The message is cautiously hawkish and points to continued pressure on FX and JGB markets if policy tightening disappoints.

Analysis

Mitsubishi UFJ Asset Management warned that a larger or out-of-cycle Bank of Japan rate hike cannot be ruled out, implying the expected hike later this month may be insufficient to stop further yen weakness and declines in Japanese government bonds. The message is cautiously hawkish and points to continued pressure on FX and JGB markets if policy tightening disappoints.