The recent signals of interest rate hikes released by the Bank of Japan have become a focal point in the market. Governor Kazuo Ueda admitted at a recent press conference that the policy committee has been discussing the impact of the continuous depreciation of the yen on inflation—this is no small matter. If the yen continues to weaken, the pressure of imported inflation will inevitably increase, and the Central Bank will have to take action sooner or later.

According to predictions from economists at JPMorgan, this "sooner or later" may be just around the corner. They believe that the Bank of Japan will initiate interest rate hikes in April and October 2024, with the policy rate expected to gradually rise to 1.25% before the end of 2026. What does this mean? It means that Japan is slowly bidding farewell to the era of ultra-loose monetary policy, as monetary policy begins its long journey towards normalization.

For the cryptocurrency market, this change in global liquidity is never a small signal. Japan, as one of the important sources of global liquidity, often sees its central bank policy shifts create ripple effects on assets like Ethereum and ZEC. On one hand, the expectation of interest rate hikes may withdraw part of the risk asset allocation; on the other hand, the expectation of yen appreciation may attract some arbitrage funds. The market logic is complex, but one thing is certain - we need to continue monitoring how the central bank's dual balance of exchange rates and inflation evolves.