BoJ’s Himino: Market sees increases in long-term rates as reflecting global inflation worries

Lallalit Srijandorn FXStreet

Bank of Japan (BoJ) Deputy Governor Himino said on Tuesday that the market sees increases in long-term interest rates as reflecting global inflation worries. Himino further stated that the central bank will consider timing and pace of adjustment while monitoring how Middle East developments affect Japan economy, price and examining likelihood of realizing the baseline scenario.

Key quotes

Market views rises in long-term interest rates reflect global concerns about inflation.

BoJ will conduct monetary policy appropriately to achieve inflation target stably, sustainably.

Will access bond market situation, market functionality while listening to market participants as we review bond tapering plans.

Our economic outlook can change depending on Middle East situation.

BoJ will continue to raise policy rate, adjust degree of monetary accommodation according to economic activity, prices, financial conditions.

Wll consider timing and pace of adjustment while monitoring how Middle East developments affect Japan economy, price and examining likelihood of realising baseline scenario.

Market reaction

At the time of press, the USD/JPY pair is up 0.04% on the day at 158.98.

(This story was corrected on May 26 at 01:55 GMT to say that at the time of press, the USD/JPY pair is up 0.04% on the day at 158.98, not 159.98.)

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

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

GBP/USD edges lower but remains close to multi-month top, awaiting US PCE

The GBP/USD pair trades with a negative bias below mid-1.3600s during the Asian session, eroding a part of the previous day's strong gains. Spot prices, however, remain within striking distance of a six-month top, set last Friday, as traders keenly await the release of the US Personal Consumption Expenditures (PCE) Price Index data for a fresh impetus.

EUR/USD Remains sideways ahead of key US events

EUR/USD clinches humble gains around 1.1670 following Tuesday’s close on Wall Street. Indeed, marginal losses in the US Dollar encourages spot to set aside two dauly pullbacks in a row and maintain the 1.1700 barrier on the cross-hairs for now. Moving forward, US inflation tracked by the PCE and another revision of Q2 GDP data should keep investors entertained on Wednesday.

Gold trades with negative bias below $4,650 as USD edges higher ahead of US PCE

Gold attracts fresh sellers following the previous day's two-way price swings, and trades below $4,650. The US Dollar regains positive traction amid some repositioning ahead of the release of the US Personal Consumption Expenditures Price Index and is seen as undermining the commodity. The crucial US inflation data, along with Federal Reserve Chair Kevin Warsh's remarks at the Jackson Hole Symposium on Friday, might offer more cues over the interest rate path.

Dogecoin, Shiba Inu, Pepe: Profit-taking cools last week’s rally

Meme coins, including Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE), are losing their bullish momentum after last week’s double-digit gains. Facing downside pressure amid profit-taking, DOGE and PEPE risk further decline while SHIB holds at a support level.

America’s self‑inflicted trade wound

I’m conflicted about the trade war that the U.S. has started with Canada. Let’s be clear: any representation that Canada has been taking unfair advantage of the U.S. or that they have been treating us badly for years is a bogus characterization. In reality, the shoe is on the other foot. It’s the U.S. that has been behaving badly.

Canada hits US goods with tariffs; The rate market sees a problem

On September 8, Canada begins charging its own importers 15%, 25% and 50% on roughly 700 lines of American goods. The measure is billed as dollar for dollar, and on the arithmetic of covered trade it is. What it is not is a tax on the United States.