(Bloomberg) -- The yen held onto its gains after Bank of Japan Governor Kazuo Ueda said he has no preconceptions about the pace of rate rises, keeping the bank’s options open following the first hike since July.
Most Read from Bloomberg
-
How Sanctuary Cities Are Preparing for Another Showdown With Trump
-
Billionaire Developer Caruso Slams LA Leadership Over Wildfires
-
Texas HOA Charged With Discrimination for Banning Section 8 Renters
-
Hoboken PATH Station Will Close for Almost a Month on Jan. 30
The Japanese currency strengthened by as much as 0.8% to 154.85 against the dollar as Ueda said the likelihood of realizing the economic outlook is rising, in a post-decision press conference. The currency trimmed its gains since then, trading at 155.53 at 4:13 p.m. local time. Japan’s two-year and five-year government bond yields earlier rose to their highest since 2008, while 10-year JGB futures turned to gains, rising 18 ticks to 140.85.
The central bank signaled that it sees a faster pace of inflation in the coming years compared with its previous forecast. Ueda also said that uncertainties remain high over President Donald Trump’s tariff details, and that foreign exchange is more likely to affect prices than in the past.
The widely expected rate hike was good news for the beleaguered yen, which has been weighed down by wide interest-rate differentials between the US and Japan, with the Federal Reserve signaling a slowdown in monetary easing. The yen had already been gaining before the BOJ decision amid a broader dollar slide after Trump said in an interview with Fox News that he would rather not have to use tariffs against China.
“By acknowledging the weak FX is having a greater impact on import inflation, he is sounding hawkish,” said Eugenia Victorino, head of Asia strategy in Singapore at Skandinaviska Enskilda Banken. “However, the upward revisions in the inflation forecasts made it very difficult to maintain a dovish stance,” and it may prompt the market to price in a higher terminal rate at 1.00% this year, instead of 0.75%, she said.
The BOJ’s rate hike is its third in less than a year, and takes the policy rate to its highest since 2008. A sharp weakening in the yen may prompt Japan to step in to prop up the currency, with Minister of Finance Katsunobu Kato recently warning that authorities will take appropriate action against excessive moves.
--With assistance from Winnie Hsu.
(Updates with strategist comment and chart)
Most Read from Bloomberg Businessweek
-
How Kendrick Lamar Turned Beef With Drake Into Music Superstardom
-
Walgreens Replaced Fridge Doors With Smart Screens. It’s Now a $200 Million Fiasco
©2025 Bloomberg L.P.