Mitsubishi UFJ: Even if the Bank of Japan adopts a cautious stance on interest rate hikes, the yen may still strengthen.

On April 28, Lee Hardman of Mitsubishi UFJ said in a report that even if the Bank of Japan is cautious about further interest rate hikes at Thursday’s meeting, the yen still has room to appreciate. In light of the tariffs imposed by the United States, the Bank of Japan is expected to downgrade its economic growth and core inflation forecasts for this year. However, these projections should still show that inflation will remain close to target in the next fiscal year, signaling further rate hikes. The slowdown in global growth will prompt other major central banks, including the Federal Reserve, to cut interest rates further and continue to narrow the yield differential with Japan, so the yen is likely to strengthen further.