The Bank of Japan kept rates steady at 1% and adjusted growth forecasts, easing yen volatility after suspected FX intervention.
EUR/JPY stabilized near 184.00 on Friday, recovering from a near 500-pip drop triggered by suspected Japanese authorities’ intervention in currency markets. The pair had plunged to around 182.00 before rebounding as markets digested the Bank of Japan’s policy decision.
The BoJ left its short-term interest rate unchanged at 1% at its July meeting, aligning with expectations. The central bank raised its fiscal 2026 real GDP growth forecast to 0.6% from 0.5% but lowered its core CPI projection for the same period to 2.5% from 2.8%. Geopolitical risks, particularly in the Middle East, were cited as a key downside risk to Japan’s economic outlook.
Japanese Finance Minister Satsuki Katayama reiterated readiness to intervene in FX markets, confirming coordination with U.S. authorities. The yen’s earlier sharp decline followed reports of potential intervention, though no official confirmation was provided.