The expectation of interest rate hikes suddenly cooled down, and the changes behind it are not simple...



Market expectations for the Bank of Japan’s April rate hike are rapidly falling.

Overnight index swaps show that the probability of a rate hike has dropped from about 60% last week to 26%.

The reason is also straightforward—geopolitical tensions easing means policy is no longer as “urgent.”

But on the other hand, Japan’s economy is still under pressure.

Between inflation and external shocks, it is repeatedly weighing the trade-offs.

On the surface, it’s an adjustment of expectations; at its core, the global liquidity is changing its pace.
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