TOKYO, Dec 10 (Reuters) – Markets are increasingly worried about Japan’s “tail risk” of slipping into a negative spiral, where monetary tightening lags inflation and a weak yen pushes prices higher, the markets chief at top lender Mitsubishi ‍UFJ Financial Group said.

Markets have priced in a 90% chance of a rate hike by the Bank of Japan this month, shifting attention to how the central bank signals its longer-term policy path.

MUFG is among top Japanese players in the foreign exchange market and the largest owner of Japanese government bonds among major banks.

“If the BOJ fails to anchor ‌expectations for further rate hikes beyond the next and the ‌government boosts spending to appease voters frustrated with inflation, the yen could weaken further,” Hiroyuki Seki, the head of MUFG’s G

See Full Page