The Bank of Japan has recently been struggling a bit. According to insiders, they are closely monitoring every move of the yen, especially its impact on inflation.

At the policy meeting on January 23 next week, the central bank is most likely to maintain the current stance, keeping interest rates unchanged. But this is not the end— the real key is that if the yen continues to depreciate, they may be forced to break with convention and accelerate the rate hike process.

From the officials' statements, concerns about the yen's weakness are growing stronger. They are considering how the yen's movement might impact inflation expectations, whether in household consumption or corporate investment. Some even openly say that the government should intervene to prevent excessive yen depreciation—in their words, the recent weakness is "a bit too much."

Looking at historical data, the 10-year average exchange rate of the yen against the dollar is around 123.20. The current decline has indeed touched a nerve among decision-makers. Central bank officials privately admit that there is still room to raise interest rates further, as long as conditions permit.

In other words, we may have to wait until next month, but don’t expect the central bank to sit idly by. The greater the pressure on the yen to depreciate, the more urgent the need for rate hikes.