Former BOJ Official Warns Japan Could Accelerate Rate Hikes Beyond 2%

Here’s a clear and concise paraphrased version:

A former Bank of Japan official has warned that interest rates could rise sharply as the yen തുടര to weaken against the U.S. dollar.

According to Tsutomu Watanabe, a University of Tokyo economics professor and former BOJ policymaker, the central bank may accelerate rate hikes this year, potentially pushing the benchmark rate above 2%.

Currently, Japan’s policy rate stands at 1% following recent increases, while the 10-year government bond yield has climbed above 2.8%—its highest level in more than 30 years, based on TradingView data.

Despite rising rates and stronger bond yields, the yen has continued to depreciate. Since early 2021, it has fallen about 60% to around 162.36 per dollar, marking a significant drop for one of the world’s most actively traded currencies. It is also down roughly 3% so far this year.

More aggressive tightening by the BOJ could help stabilize or even strengthen the yen. However, it remains unclear whether this would support bitcoin (BTC) or create headwinds.

One widely discussed market theory suggests that a stronger yen could trigger the unwinding of leveraged positions across global assets—such as government bonds, tech stocks, and cryptocurrencies—that were funded by years of low-cost yen borrowing. If that happens, risk assets, including crypto, could face downside pressure.

That said, recent trends challenge this view, as both the yen and bitcoin have been moving lower against the dollar in tandem, showing a positive correlation.

Additionally, some economists warn that rapid rate hikes could further strain Japan’s already fragile fiscal situation.

Overall, the outlook remains uncertain and highly complex.