Economist: The relationship between the Bank of Japan and the government is crucial to the impact of interest rate hikes.

Economist Hideo Kumano of the Dai-ichi Life Research Institute stated that the relationship between the Bank of Japan and Prime Minister Sanae Takaichi is crucial for whether the next interest rate hike will boost the yen. Kumano said, "If the government of Sanae Takaichi criticizes the Bank of Japan's interest rate hike, the momentum to correct the weakness of the yen will be weakened." Although Sanae Takaichi is considered to lean towards more accommodative monetary policies, the government's focus on tackling the continuously rising cost of living is one of its main priorities, and the surge in energy prices has made this task more complex. The OIS market expects a 70% likelihood of the Bank of Japan raising interest rates in April.