J.P. Morgan's economist Ayako Fujita recently made a clear judgment: the Bank of Japan is certain to continue raising interest rates, with expectations of a hike in April and October 2025, and the policy interest rate is expected to rise to 1.25% by the end of 2026.

The Governor of the Bank of Japan, Kazuo Ueda, also admitted that some members of the committee are beginning to worry about the impact of the depreciation of the yen on future inflation.

In short, the yen issue is no longer just a currency exchange topic; it has now escalated to the level of inflation expectations and Central Bank policy credibility.

**Why must Japan raise interest rates? The core reason is one word: Yen**

In the past two years, Japan has been taking a gamble - as long as global inflation comes down, it can tolerate a weaker yen. But reality has started to bite back.

The continuous depreciation of the yen has brought a series of troubles: energy, food, and raw materials have all increased in price (input inflation); if businesses and ordinary people form the expectation that "the yen will only get weaker," the spiral of rising wages and prices will be set in motion; the market begins to question—has the yen depreciated so severely because the Central Bank of Japan has not intervened?

When reporters repeatedly questioned this issue at the press conference, it indicated that a signal had already emerged: the market was no longer willing to give the Central Bank the opportunity to "delay."

**Why are JPMorgan's predictions so important?**

Because this is not an emotional judgment, but rather a specific path planning - one interest rate increase in the spring of 2025, and another in the autumn. Once the specific time nodes are established, it means that market expectations are gradually stabilizing, and the Central Bank's policy space is also being tightened further.