Rabobank projects USD/JPY at 158 in three months as BoJ considers a 25 bps hike and pauses bond tapering from April 2027.
The Bank of Japan is poised to raise interest rates by 25 bps at its next policy meeting, aligning with market expectations. Reports also suggest the central bank may pause its government bond purchase tapering starting April 2027, once holdings decline by 16-17%.
Current tapering has reduced BoJ’s JGB holdings, but concerns over inflation and fiscal stimulus have raised volatility risks. Pausing tapering could stabilize the market, assuming bond supply remains steady. Domestic and overseas demand for JGBs may further support stability.
Rabobank forecasts USD/JPY at 158 within three months, contingent on continued BoJ tightening. Reduced volatility in JGBs is expected to limit sharp yen movements.