The Bank of Japan hiked rates as expected, but the yen remains under pressure amid broader dollar strength and Middle East tensions.
The yen hovered near the 160 level against the dollar after the Bank of Japan raised interest rates to a 31-year high, a move widely anticipated by markets. The 7-1 vote on the policy board signaled some internal debate over the timing of future hikes, though the central bank emphasized monitoring inflation risks tied to the Middle East conflict.
Investors parsed comments from BOJ Deputy Governor Shinichi Uchida, who stressed the need to align policy with economic and price developments, particularly as underlying inflation nears 2%. The dollar held near 10-day lows, supported by a preliminary deal to end the Iran war, though skepticism over the agreement’s durability lingered.
Markets remain focused on this week’s flurry of central bank meetings, with the BOJ’s cautious stance contrasting against broader expectations for global monetary policy shifts. The yen’s muted reaction underscored persistent concerns over Japan’s inflation trajectory and external risks.