Bank of America Sees BoJ Rate Hikes Through 2027 as Yen Weakens
Bank of America economist Takayasu Kudo says the Bank of Japan (BoJ) has shifted to a more hawkish policy stance after lifting rates to 0.75% in December. Kudo forecasts a gradual tightening path with potential additional rate hikes in June 2026, January 2027 and July 2027, driven by improving inflation momentum, rising wages and corporate earnings, and stronger BoJ confidence in policy tools. For crypto markets, Kudo highlights risks from increased yen volatility, higher cross-border funding costs, and altered trading flows on digital-asset venues. Traders should monitor BoJ communications and incoming macro data to gauge shifts in liquidity, risk sentiment and capital flows that could affect crypto prices and margin funding conditions.
Neutral
The news signals a predictable, gradual policy normalization from the BoJ rather than an abrupt shock. Rate hikes through 2027 and a weaker yen can increase volatility and raise cross-border funding costs—factors that often pressure leveraged crypto positions and can temporarily reduce liquidity, which is bearish for short-term risk assets. However, the gradual and signaled nature of the hikes gives markets time to adjust; improved macro fundamentals (higher wages and earnings) can support risk appetite over the medium term. Historically, yen weakness and higher global rates have produced bouts of short-term crypto sell-offs (due to margin calls and tighter funding) followed by stabilization as markets price in new interest-rate regimes. Therefore the immediate effect is likely mixed: elevated volatility and funding-cost stress (short-term bearish for leveraged traders), offset by a neutral-to-supportive medium-term environment if global risk-on returns as inflation normalizes and liquidity adapts.