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AUD/JPY holds gains around 103.00 following BoJ policy decision

  • AUD/JPY advances after the Bank of Japan raised its short-term interest rate by 25 basis points, as expected.
  • BoJ decision was unanimous, with real rates to stay low and further hikes likely if forecasts are met.
  • The Australian Dollar is supported as consumer inflation expectations reinforce the Reserve Bank of Australia’s hawkish stance.

AUD/JPY extends its winning streak for the third successive session, trading around 103.00 during the Asian hours on Friday. The currency cross gains ground as the Japanese Yen (JPY) declines after the Bank of Japan (BoJ) board members decided to raise the short-term interest rate by 25-basis-point (bps) to 0.75% from 0.50%, as widely expected. The Japanese central bank raised the benchmark interest rate to its highest in 30 years, as it seeks to move ahead with policy normalization set forth last year.

The Bank of Japan’s policy statement showed that the decision was made unanimously. The BoJ expects real interest rates to remain significantly low and reiterated that it will continue raising the policy rate if economic activity and prices evolve in line with its forecasts. The policy statement also indicated that the central bank will conduct monetary policy as appropriate from the perspective of sustainably and stably achieving 2% inflation target.

The AUD/JPY cross also appreciates as the Australian Dollar (AUD) receives support from investors’ caution following the release of Australia’s Consumer Inflation Expectations, which rose to 4.7% in December from November’s three-month low of 4.5%, supporting the Reserve Bank of Australia’s (RBA) hawkish stance.

Australia’s Private Sector Credit rose 0.6% month-over-month (MoM) in November, beating expectations of 0.2% but slowing from October’s 0.7% increase. On an annual basis, credit growth edged up to 7.4% YoY from 7.3%, marking the fastest pace since January 2023.

Economic Indicator

BoJ Interest Rate Decision

The Bank of Japan (BoJ) announces its interest rate decision after each of the Bank’s eight scheduled annual meetings. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and raises interest rates it is bullish for the Japanese Yen (JPY). Likewise, if the BoJ has a dovish view on the Japanese economy and keeps interest rates unchanged, or cuts them, it is usually bearish for JPY.

Read more.

Last release: Fri Dec 19, 2025 03:20

Frequency: Irregular

Actual: 0.75%

Consensus: 0.75%

Previous: 0.5%

Source: Bank of Japan

Author

Akhtar Faruqui

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

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