The Bank of Japan (BoJ) increased rates by 25 basis points this morning, in line with market expectations and consensus. Markets are still assessing Governor Kazuo Ueda’s press conference as we write, but the yen’s reaction to the entire event signals a hawkish surprise, mainly related to the upward revision of headline and core inflation projections, notes Francesco Pesole, currency analyst at ING.
USD/JPY may push towards 155.0 mark
“Policymakers now expect inflation of 2.4% (up from 1.9%) in 2025 and the BoJ added that it ‘will continue to raise the policy interest rate and adjust the degree of monetary accommodation,’ repeating language used in the July statement. Some earlier comments by Ueda about the possibility of delaying the hike if markets proved too volatile after Trump’s inauguration have been clarified, noting in the statement that markets have been stable in general.”
“USD/JPY briefly traded below 155.0 this morning before recovering some losses as Ueda struck a rather cautious tone at the press conference. He gave no indication on the timing of the rate hike or the pace of further tightening “JPY two-year swap rates rose only modestly to 0.74%, signaling that there is still room for a hawkish rally ahead to help the yen.”
“We now expect two more hikes in May and October this year, which would help the yen counter the broad-based dollar strength and keep some pressure on USD/JPY towards the 155.0 mark.”
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.
