Goldman Sachs: If the yen rises to 130 against the dollar, the Bank of Japan may consider stopping interest rate hikes

Odaily News Goldman Sachs analysts said that if the yen strengthens to 130 against the dollar, the outlook for continued inflation in Japan becomes dim and the Bank of Japan may consider pausing its rate hikes. Goldman Sachs economists led by Akira Otani wrote that a sharp appreciation of the yen could squeeze profits of Japanese exporters, depress import prices, curb domestic investment and weaken wage growth, posing challenges to the Bank of Japan's continued tightening policy. They also said that if the yen strengthens to a low of more than 130 against the dollar, the Bank of Japan may lower its inflation forecast for fiscal 2026 to around 1.5%, below its 2% target. Conversely, if the yen falls below 160 - the level that triggered the Bank of Japan's rate hike in July last year - the Bank of Japan may consider further or accelerating rate hikes. (Jinshi)