Weak yen strengthens case for year-end rate hike

The policies proposed by Donald Trump may well end up providing a small net boost to Japan’s economy. While higher tariffs will result in a small fall in export volumes, it now seems likely that the yen will remain weaker for longer, which will lift corporate profits and business investment. But while the renewed weakening of the yen in recent weeks increases our conviction that the BoJ will hike rates next month, we still believe that there won’t be any further tightening next year.