The Bank of Japan's April interest rate decision will be released today. Analysts speculate that Governor Kazuo Ueda will further push the hawk to save the yen by one thousand miles.

Masayuki Murata, director of balanced portfolio investment at Sumitomo Life Insurance, said, “Kazuo Ueda will consider the impact of the weak yen. Although it is unlikely that interest rates will be raised at this meeting, he may hint at future rate hikes. That's why bank stocks have been rising lately.”

The exchange rate of the Japanese yen against the US dollar fell below 155 this week, setting a record low in more than 30 years, triggering market concerns about the Japanese economy.

According to media surveys, the Bank of Japan is expected to keep interest rates unchanged on Friday. The Bank of Japan's focus at the April interest rate meeting will be to find a balance between supporting the yen exchange rate and economic recovery.

The market's focus is on economic growth and price forecasts for the latest quarter. As the yen exchange rate continues to hit a 34-year low this week, the situation faced by the Bank of Japan has become complicated. Considering the risk of rising inflation, it may change its position of continuing to maintain an easing policy.

Chisa Kobayashi, a Japanese stock strategist at UBS Asset Management, said, “Many investors seem to think that with the end of the negative interest rate policy, the Bank of Japan's austerity policy is over now. However, in the long run, the Bank of Japan may further tighten its policy, and this seems to have been overlooked.”

Sachin Gupta, portfolio manager at Pimco, shared similar views. He believes that even after the historic rate hike last month, the Bank of Japan may raise interest rates three times during the year.

“From our point of view, this is actually the beginning, not the end, of Japan's monetary policy adjustments,” Gupta said. The Bank of Japan is expected to raise interest rates by another 75 basis points during the year. Interest rate derivatives currently indicate that Japan's policy interest rate may rise to 0.25% by October this year.

Gupta predicts that Japan's austerity cycle may be extended to 2025.

Editor/Somer