Dow futures up over 350 points; 10-year yield slides to -0.06%

The Bank of Japan may consider pausing its interest-rate hikes if the yen strengthens toward 130 per US dollar and its outlook for sustained inflation dims, according to analysts at Goldman Sachs Inc.

A sharp appreciation of the yen could squeeze profits for Japan’s exporters, cool import prices, curb domestic investment and weaken wage growth, posing a challenge for the BOJ to stay on a tightening path, Goldman economists led by Akira Otani wrote in a report released Monday. They added that if the yen strengthens into the low 130s, the central bank could lower its inflation forecast for fiscal 2026 to around 1.5%, falling short of its 2% price target.

Conversely, if the yen slides past 160 — a level that helped trigger a BOJ hike last July — the bank may consider advancing or accelerating further rate increases, the economists said.