BoJ to leave interest rates unchanged in July policy meeting - Kyodo

Sagar Dua FXStreet

According to a Kyodo News report, the Bank of Japan (BoJ) is expected to keep interest rates unchanged at 1% in the July policy meeting, people familiar with the matter told. The report also showed that the central bank will likely raise its growth forecast for the year. Over the monetary policy outlook, sources said that there is a need for back-to-back interest rate hikes.

Market reaction

No major response was seen in the Japanese Yen (JPY) following the news release. At press time, USD/JPY trades almost flat around 162.40.

Bank of Japan FAQs

What is the Bank of Japan?

The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.

What has been the Bank of Japan’s policy?

The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.

How do Bank of Japan’s decisions influence the Japanese Yen?

The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.

Why did the Bank of Japan decide to start unwinding its ultra-loose policy?

A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

AUD/USD holds above 0.6900 ahead of Fed's Warsh

AUD/USD struggles to capitalize on the previous day's modest bounce from its lowest level since early July and trades above 0.6900 in the Asian session on Friday. Thursday's disappointing Australian jobs data tempered RBA rate-hike bets, capping the Aussie. The US Dollar (USD), meanwhile, is regaining positive traction as this week's hot US CPI and PPI reports keep Fed rate hike bets firmly on the table. This further limits the pair ahead of Fed Chair Kevin Warsh speech.

USD/JPY retakes 158.00, with eyes on Warsh's speech

USD/JPY retakes 158.00 in the Asian session on Friday, holding on the overnight bounce from the vicinity of 157.50, or a one-week low, amid the emergence of some US Dollar buying. This week's hot US CPI and PPI reports lifted Fed rate-hike bets, which, along with stable US bond yields and geopolitical uncertainties, help revive USD demand. Traders, however, remain on high alert amid speculation that authorities will step in to prop up the Japanese Yen, which could cap the currency pair ahead of Fed Chair Kevin Warsh's speech.

Gold eases to $4,150 as traders await Warsh's speech

Gold drifts lower to near $4,150 in the Asian session on Friday, reversing part of the previous day's move up amid reviving US Dollar demand. US inflation data released this week reaffirmed bets for at least one Fed rate hike this year, while US bond yields stabilize after Thursday's steep decline. This, along with geopolitical risks, underpins the safe-haven USD, which, in turn, is seen weighing on bullion ahead of Fed Chair Kevin Warsh's speech.

Ethereum reclaims $2,400 as PPI hits 6.3% and yields fall

Ethereum (ETH) is back above $2,400 on Thursday, rebounding from a brief decline toward $2,340, which was sparked by an upside surprise in the US wholesale inflation report. The Producer Price Index (PPI) increased 1.3% monthly and 6.3% annually in September, far above expectations of 0.5% and 5.3%, respectively.

US midterms put fiscal policy under the spotlight, treasury sell-off raises risk

The US will hold its midterm elections - a de facto referendum on the Trump administration - on 3rd November after two years shaped by rising trade protectionism, attacks on Federal Reserve independence and, since the spring, the Iran war. Republicans are expected to take a heavy electoral hit.

Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.