Contrary to the view of most BoJ watchers, the central bank announced a 15 basis point rate hike this morning, decided by a 7-2 majority. It also announced that its bond-buying program will be reduced by about ¥400 billion each quarter, so that it will be about ¥3 trillion in the first quarter of 2026, from about double that size recently, notes Jane Foley, senior FX strategist at Rabobank.
Yen strengthens against US dollar
“The BoJ’s policy statement includes a fairly upbeat assessment of Japan’s economic outlook, stating that fixed investment is ‘on a moderately rising trend’ and that corporate profits are ‘improving’. It says that wage increases ‘have spread across regions, industries and firm sizes’. This leaves the door open for further rate hikes potentially in late 2024 or early 2025.”
“While USD/JPY weakened on today’s policy announcement, it had rallied earlier in the session on local media reports that the BoJ was discussing a rate hike. Although USD/JPY is above the day’s lows, it still remains below yesterday’s opening levels. We have brought forward our previous year-end forecast for USD/JPY of 152.00 to a 3-month view and adjusted lower our 1-month forecast.”
“The next key focus for USD/JPY is tonight’s Federal Reserve policy announcement. The USD has been on the defensive for much of July as the market priced in a Fed rate cut in July. This helped accentuate the impact of the suspected MoF intervention from July 11. The USD may weaken a bit further, although we would not expect a big USD move post-Fed today.”
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.
