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The Bank of Japan maintained its benchmark interest rate at 0.5% in a unanimous 9-0 decision, aligning with market expectations. The earlier-than-usual release of the policy decision suggests that the board reached a straightforward conclusion, reaffirming its confidence in the current stance despite stronger domestic inflation and rising wages.
In its statement, the central bank reiterated key messages from January, noting that currency movements are expected to have a greater influence on prices, while economic activity and inflation remain subject to high uncertainty. The BoJ also maintained its view that the virtuous cycle between wages and prices is set to strengthen.
On the currency front, TD Securities sees offshore factors as the primary driver for USD/JPY. TD anticipates a modest decline in U.S. yields, potentially pushing USD/JPY beyond the 150 level.
Re the BoJ yesterday:
- ForexLive Asia-Pacific FX news wrap: BoJ holds rates steady, markets eye Ueda & Fed ahead