- EUR/JPY attracts some sellers after the BoJ announced its policy decision on Friday.
- The Japanese central bank decided to keep interest rates unchanged, as expected.
- Traders still expect the BoJ to raise rates again in 2024, lending some support to the JPY.
The EUR/JPY pair is lower after the Bank of Japan (BoJ) announced its policy decision on Friday and is moving away from a more than two-week high around the psychological mark of 160.00 touched the previous day. Spot prices are falling closer to the 158.00 area in the last hour, although they remain confined to the wider range of the previous day.
As widely anticipated, the Japanese central bank kept the short-term interest rate target in the 0.15%-0.25% range at the end of a two-day monetary policy review meeting. In the accompanying policy statement, the BoJ noted that Japan’s economy will achieve above-potential growth and that inflation will likely be at a level generally consistent with the price target. However, this fails to provide any significant boost to the Japanese Yen (JPY), although the BoJ’s hawkish expectations continue to act as a headwind for the EUR/JPY cross.
Indeed, recent comments from a number of BoJ officials suggested that the Japanese central bank will raise interest rates again by the end of this year. Bets were reaffirmed by the latest consumer inflation figures released on Friday, which showed that Japan’s headline CPI rose to 3% year-on-year in August from 2.8% the previous month, hitting a 10-month high. In addition, the core CPI, which excludes volatile fresh food prices, rose to 2.8%, or a 10-month high amid a sustained rise in consumption due to higher wages.
In contrast, the European Central Bank (ECB) last week signaled a downward path for borrowing costs in the coming months after cutting interest rates for the second time in this cycle. However, reports that ECB policymakers see a rate cut in October unlikely barring a major deterioration in growth prospects, coupled with a bearish US Dollar (USD), lend some support to the common currency. This, in turn, should limit losses for the EUR/JPY cross, which remains on track to post weekly gains for the first time in the past three.
Economic indicator
BoJ interest rate decision
He Bank of Japan The Bank of Japan sets the interbank interest rate. This rate affects a range of interest rates set by commercial banks, building societies and other institutions towards their own savers and borrowers. It also affects the price of financial assets such as bonds, stocks and exchange rates, which affect consumer and business demand in a variety of ways. If the Bank of Japan has a firm outlook on the Japanese economy and increases the current interest rate, this is bullish for the yen. Conversely, a dovish outlook that leads the bank to reduce or maintain current rates will be bearish for the yen.
Latest Post:
Fri Sep 20, 2024 02:52
Frequency:
Irregular
Current:
0.15%
Dear:
–
Previous:
0.15%
Fountain:
Bank of Japan
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
