Bank of Japan maintains short-term interest rate at 1%, fueling Yen weakness and lifting the USD/JPY pair near 160.80.
The Japanese Yen weakened after the Bank of Japan left its short-term interest rate unchanged at 1.00%, pushing USD/JPY to 160.80 during Asian trading. The decision, voted 8-1, aligned with market expectations, though one policymaker sought a hike amid inflation risks tied to Middle East tensions.
Prior to the announcement, the pair had declined for two consecutive sessions. Analysts noted a shift in Japan’s policy rhetoric, with authorities pivoting from FX intervention threats to growth-focused measures like tax cuts. Finance Minister Satsuki Katayama reiterated readiness for market intervention but emphasized coordination with U.S. officials.
Strategists warn the Yen’s decline may face resistance as geopolitical tensions ease, reducing safe-haven demand for the USD. Improved global risk sentiment could cap further gains in the currency pair.