Japan’s central bank raised rates by 25 basis points but signaled no accelerated tightening path, capping near-term yen support.
The Bank of Japan lifted its policy rate by 25 basis points to 1.0%, matching expectations, but the move failed to strengthen the yen. The decision included one dissent from new board member Asada, who favored holding rates steady. Tapering of bond purchases will conclude in April 2027, as previously outlined.
Despite the rate reaching a 30-year high, Japan retains the lowest real rate in the G10, limiting the yen’s appeal. The BoJ maintained a cautious stance, indicating further hikes are possible but not imminent. This leaves the yen vulnerable as a funding currency unless policy shifts more decisively hawkish.
USDJPY remains above 160, keeping intervention risks elevated. However, verbal warnings alone are unlikely to drive a sustained reversal without clearer tightening signals from the BoJ.