Mitsubishi UFJ Asset Management warned that the Bank of Japan may need to implement larger-than-expected rate hikes to support the yen. Masayuki Koguchi, executive chief fund manager, stated a standard 25 basis point hike would be insufficient to prevent further yen decline, suggesting increases of 50-75 basis points might be necessary.

The yen has weakened beyond 160 per dollar this week, reaching its lowest level since April 30, while Japanese government bond yields climbed to multi-year highs. Despite record government intervention to support the currency, markets show growing concern that current monetary policy fails to address mounting inflationary pressures.

Financial experts across the industry echo these concerns, with Mizuho's CEO and Nomura strategists suggesting the BOJ may need to surprise markets with outsized rate increases. The last time the BOJ raised rates by more than 25 basis points was in August 1990 during Japan's asset bubble, highlighting how unprecedented such a move would be in today's economic climate.