🚨 THE ERA OF CHEAP YEN IS OVER: BOJ Eyes 1.5% Target
The "Land of the Rising Sun" is now the land of rising rates. Former Bank of Japan (BOJ) board member Makoto Sakurai just dropped a bombshell outlook that signals a massive departure from decades of ultra-loose monetary policy.
Here is what you need to know about Japan’s aggressive pivot:
📈 The Roadmap to 1.5%
Following the BOJ’s recent hike to 0.75%, Sakurai suggests the central bank is nowhere near finished. The new trajectory looks like this:
The Summer Surge: A predicted hike to 1.0% by June or July 2026.
The Safety Buffer: A push toward 1.5% to ensure the BOJ has "ammunition" (room to cut) if a future recession hits.
The Ceiling: Policy is expected to throttle back once it nears the 1.75% neutral rate.
🌍 Why the World is Watching
Japan has been the world’s primary source of cheap capital for years. This shift creates a massive ripple effect:
The Carry Trade Collapse: Investors who borrowed Yen at 0% to fund global bets are feeling the squeeze, leading to potential volatility in US and emerging markets.
A Resurgent Yen: As Japanese yields become more attractive, expect capital to flow back home, putting upward pressure on the JPY.
Debt Stress: With one of the highest debt-to-GDP ratios in the world, Japan is entering uncharted territory as it balances higher borrowing costs with economic growth.
"The BOJ needs to reach 1.5% to secure policy flexibility." — Makoto Sakurai
The global "cheap money" era is officially in the rearview mirror. As Japan normalizes, every global asset class—from US Treasuries to Tech stocks—will feel the vibration.
