The Japanese yen has hit a new low again. The USD/JPY exchange rate has fallen to 158.55, approaching multi-decade lows, and the market is beginning to wonder—will the Bank of Japan be forced to act sooner?

From within the central bank, officials' anxiety is evident. The yen's weakness itself isn't the concern; it's the pass-through effect on prices. What will businesses do? As import costs rise, they naturally pass these costs onto consumers, resulting in increased inflationary pressure. This chain of reactions could disrupt the decision-making rhythm that was previously planned.

According to market expectations, the next rate hike should occur this summer. But based on officials' attitudes, they don't seem to plan to be so leisurely. If the yen continues to depreciate, the original plan to raise interest rates every six months might need to change—actions could come earlier. The policy meeting on the 23rd of this month is expected to keep rates at 0.75%, a thirty-year high, but the key is how they assess the impact of the exchange rate on inflation expectations.

The depreciation of the yen has a dual nature. On one hand, rising import costs do indeed push up prices; on the other hand, exports become more competitive. But now officials are increasingly aware that excessive yen weakness is expanding its negative impacts. The question is—when is the right time to act? Too late, and inflation could spiral out of control; too early, and the exchange rate might overreact.

Interestingly, Japanese businesses are also becoming restless. Yoshinobu Tsutsui, President of the Japan Business Federation, publicly spoke out this week, directly urging the government to intervene in the "somewhat excessive" yen depreciation. What does this indicate? The anxiety among companies regarding the exchange rate has risen to a significant level.

Data shows that the central bank just mentioned interest rates last month, but the yen against the dollar remains weak. Recently, influenced by domestic political factors, the yen has fallen to an 18-month low. According to Bloomberg, over the past two years, the yen has fluctuated widely between 140 and 161.95—an enormous volatility reflecting market uncertainty.

The monetary authorities have already intensified verbal warnings. The yen has rebounded slightly from its lows, but the overall trend remains depreciating. This ongoing downward pressure is making it increasingly difficult for the central bank to choose a course of action. On one side, the exchange rate is falling; on the other, inflation is rising. These two forces are pushing the Bank of Japan into a more complex crossroads.