The Federal Reserve kept rates steady at 3.50%-3.75% but hinted at a potential September hike amid inflation concerns.
The USD/JPY pair climbed to near 163.50 in Asian trading on Thursday after the Federal Reserve maintained interest rates at 3.50%-3.75% but signaled a hawkish stance. Three dissents favored a rate increase, raising expectations for a September hike.
The Fed’s decision aligned with market expectations, though the hawkish tone contrasted with prior meetings. Persistent inflation and rising energy costs were cited as key drivers. Meanwhile, the Bank of Japan is set to announce its rate decision on Friday, with no change expected at 1.0%.
Geopolitical tensions in the Middle East added support to the USD, as U.S. military strikes against Iran heightened risk sentiment. Traders await the BoJ’s communication for potential future rate hike signals.