Here’s another rewritten version with a concise financial-news style:

A former Bank of Japan official has warned that the central bank may move toward a faster pace of rate hikes as the yen’s decline against the U.S. dollar continues, potentially pushing interest rates above 2%.

Tsutomu Watanabe, a University of Tokyo economics professor and former BOJ official, said Japan’s monetary tightening cycle could accelerate this year, according to Bloomberg.

Japan’s benchmark interest rate currently stands at 1% following recent increases, while the 10-year government bond yield has climbed above 2.8%, marking its highest level in more than 30 years, based on TradingView data.

Despite higher rates and rising bond yields, the yen has remained weak. The currency has lost around 60% of its value against the dollar since early 2021, falling to approximately 162.36 per dollar, and has declined about 3% this year.

A more aggressive BOJ tightening path could help stabilize the yen or spark a recovery. However, its effect on bitcoin and other risk assets remains uncertain.

For years, investors have warned that a stronger yen could trigger the unwinding of carry trades, where cheap yen borrowing is used to finance investments in global bonds, equities, and cryptocurrencies. Such a reversal could create selling pressure across risk markets.

However, recent price action has challenged that idea, with both bitcoin and the yen weakening against the dollar rather than moving in opposite directions.

At the same time, economists have cautioned that rapid rate increases could further strain Japan’s already fragile fiscal situation.

The interaction between monetary policy, currency movements, and global markets makes the outlook increasingly complex.