The Bank of Japan is under increasing pressure from the yen's depreciation. The latest economist survey data is on the table — out of 52 industry insiders, more than half believe that the current pace of interest rate hikes is too slow.

The current situation is as follows: the yen against the dollar has fallen to around 158.50, just shy of the nearly 40-year low set last July. This ongoing depreciation not only intensifies domestic inflation pressures in Japan but also directly affects market expectations for the central bank's next move. The 160 exchange rate threshold has long been marked by the market as a potential "red line" that could trigger an earlier rate hike.

Interestingly, although all surveyed economists believe that the Bank of Japan will maintain the benchmark interest rate at 0.75% during the policy meeting on January 22-23, there are already differences in opinions about the timing of the next rate hike. Data shows that July is the most favored option, supported by 48% of economists — a figure that far exceeds the 17% support for April and June.

Compared to the rate hike the central bank completed in December last year, this expectation appears more aggressive. Over 60% of respondents think that the normalization of monetary policy starting from March 2024 is "too slow," with only 35% believing the current pace is appropriate. Nearly seven in ten respondents also expect the central bank to maintain a "rate increase every six months" rhythm in the future.

The real variable remains the yen exchange rate. Since Prime Minister Fumio Kishida took office last October, the yen has been in a continuous weakening trend. This trend is becoming the biggest uncertainty in breaking the central bank's "schedule."