The Governor of the Bank of Japan (BOJ) on Tuesday indicated that the central bank will raise interest rates further if the economy and prices perform as expected. The Japanese yen rose to close to 146 against the US dollar, recovering from a two-week low amid expectations the Bank of Japan's monetary policy is likely to raise interest rates.
BOJ Governor Confirms Interest Rate Hike Bank of Japan Governor Kazuo Ueda in a document submitted to a government panel chaired by retiring Japanese Prime Minister Fumio Kishida reiterated further interest rate hikes, according to a September 3 Bloomberg report.
This latest confirmation reminded investors that even with the market slump triggered by the BOJ's July rate hike, the central bank will raise borrowing costs if the bank's forecasts come true. The Japanese yen strengthened above 146 against the US dollar today after the statement.
Two-thirds of the economists surveyed indicated another interest rate hike by the BOJ by the end of the year. Notably, 41% of respondents expected December as the most likely time. In contrast, Pacific Investment Management expects a rate hike in January.
Japan's 10-year government bond yield rose above 0.92%, hitting a four-week high on expectations the BOJ is likely to raise interest rates.
Earlier, Japan's largest brokerage firm, Nomura Holdings, confirmed that the Japanese yen "carry" trade that caused the market to fall is returning. If the interest rate differential between the US and Japan remains high, more investors will enter yen "carry" trades. This risks causing a fall in the price of Bitcoin as happened on Black Monday, triggering a massive sell-off in the crypto market as a whole.
However, the Chairman of the US Fed, Jerome Powell, gave an indication of the reduction of Fed interest rates that will start in September. According to CME FedWatch data, there is a 67% probability of a 25 basis point interest rate cut in September, with the market still expecting a 100 basis point rate cut this year. This can prevent a market decline as the difference will narrow.
BTC price is currently struggling to break above the $60,000 level amid market uncertainty. BTC price is down from today's gains, with the price currently trading at $59,104. Furthermore, trading volume has decreased by 20% in the last 24 hours, indicating a decrease in interest among traders.
