Bank of Japan (BoJ) Governor Kazuo Ueda explains reasons behind keeping interest rates intact at the December meeting while speaking at the post-policy meeting press conference on Thursday. The Bank expects the BOJ-NET to contribute to enhancement of financial services and user-friendliness of settlement systems, which lead to further development of financial markets in Japan. To this end, the Bank will continue to communicate with a wide range of relevant entities so that financial institutions can make effective use of the BOJ-NET. Looking ahead, the BOJ is likely to continue refining its monetary policy tools to address the evolving economic landscape. Innovations in financial technology, changes in global trade patterns, and demographic shifts within Japan all require careful consideration in the BOJ’s policy formulation. The Bank of Japan faces a complex set of challenges as it navigates the current economic landscape.
Monetary policy is decided by the Policy Board at Monetary Policy Meetings (MPMs). At MPMs, the Policy Board discusses the nation’s economic and financial situation, sets the guidelines for money market operations, and the Bank’s monetary policy stance for the immediate future. As the world grapples with the challenges of climate change, central banks are increasingly incorporating environmental considerations into their policy frameworks.
Until now there was enough bullishness surrounding domestic data that some 50% of surveyed analysts saw the earliest possible timing for a rate change coming at the next meeting. Bond traders were parsing Ueda’s remarks, given the steep upward trajectory in bond yields. Japan’s 30-year bond yields recently rose to the highest level since 2006 and benchmark 10-year yields this month hit the highest level since 2008. The Federal Reserve is expected to deliver two reductions this year beginning in September, holding steady for now when it makes its next rate decision later in the day, keeping the rate differential with Japan wide. A decision to stand pat will shift market attention to key data and events leading up to the January meeting. By contrast, Ueda may deliver dovish communication if the BOJ were to raise rates to convince markets that it won’t go on auto-pilot and instead tread carefully on further tightening.
More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen. Additionally, the BOJ’s communication strategy will play a crucial role in shaping market expectations and investor sentiment. Clear and transparent communication about policy decisions, economic outlook, and risk assessments can help enhance market stability and reduce uncertainty. The BOJ may explore new communication tools and channels to engage with a diverse range of stakeholders and ensure that its policies are well understood and effectively implemented. As the yen is a major reserve currency, its value is of paramount importance to international trade and finance. Decisions made by the BOJ can lead to significant fluctuations in the yen’s value, impacting global markets, commodity prices, and foreign exchange rates.
There are also two deputy governors, six members of the Policy Board, three or fewer auditors, „a forex moving average few” counselors, and six or fewer executive directors heading the BOJ. All of these officers belong to the bank’s Policy Board, which is the Bank’s decision-making body. The Board sets currency and monetary controls, the basic principles for the Bank’s operations, and oversees the duties of the Bank’s officers, excluding auditors and counselors. The Policy Board includes the governor and the deputy governors, auditors, executive directors, and counselors.
„We’ll make sure not to be too behind the curve” in dealing with domestic inflation risks, he added. He offered few hints on the next rate-hike timing, but said the BOJ did not necessarily need to wait until everything is clear on the impact of U.S. tariffs, in pulling the trigger. Regardless of whether the BOJ hikes rates or not, Ueda is likely to offer guidance on the future rate-path and trigger for action at his post-meeting news conference. Such dynamics may likely see the BoJ revise up their inflation forecast at the upcoming outlook report.
The BOJ ended negative interest rates in March and raised its short-term policy target to 0.25 per cent in July. However, with criticism over past communication missteps—particularly during the July 2024 policy adjustment—BoJ officials will have to navigate carefully so as to avoid undesired market volatility. A surprise decision to hold rates steady at the upcoming meeting could trigger an initial sell-off in the Japanese yen, but that could be counterbalanced by a how much can i make with $100 in forex slightly hawkish tone from policymakers to mitigate the yen’s decline. In 1999, the BOJ started zero-interest-rate policy (ZIRP), but they ended it despite government opposition when the IT bubble happened in 2000. From 2003 to 2004, Japanese government did exchange intervention operation in huge amount, and the economy recovered a lot.
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The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. The researcher sold classified material at a „very low price” to a foreign spy agency, authorities say. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5 percent. Following the passage of the Convertible Bank Note Regulations (May 1884), the Bank of Japan issued its first banknotes in (Meiji 18). Despite some small glitches—for example, it turned out that the konjac powder mixed in the paper to prevent counterfeiting made the bills a delicacy for rats—the run was largely successful.
A notable 0.3% upward revision to the previous 3Q gross domestic product (GDP) figure further indicates a supportive growth outlook, though concerns about persistent weakness in consumption remain a key area of caution. USD/JPY pares intraday losses during the five-day losing streak at the lowest level in a week ahead of the BoJ event. Escalating the importance of today’s BoJ announcements is the quarterly BoJ Outlook Report and the latest chatters suggesting the Japanese central bank’s readiness for tweaking the Yield Curve Control (YCC) policy. The decision marks the BOJ’s first rate hike since July and came just days after Donald Trump returned to the White House.
For now the BOJ has some time for watching developments after last hiking the rate two months ago. With inflation trends staying more or less in line with the bank’s projections, most economists expect the bank to wait until June or July to raise its policy rate. The outlook for the global economy has taken a turn for the worse as Trump forges ahead with his tariff campaign. On Monday the OECD cut its world growth forecast to 3.1% for 2025 to account for disruptions to global commerce.
Although we are not specifically constrained from dealing ahead of our recommendations we do not seek cryptocurrency brokers to take advantage of them before they are provided to our clients. He is a professor emeritus at the University of Tokyo and also worked as a professor at Kyoritsu Women’s University. In February 2023, former Prime Minister Fumio Kishida nominated Ueda as the governor of the BoJ. He is widely regarded as an expert on monetary policy but was considered a surprise appointment by analysts.
In pursuit of this goal, the BOJ employs various monetary policy tools, including interest rate adjustments, market operations, and quantitative easing measures. These tools are designed to influence the cost of borrowing, consumer spending, and investment levels, thereby steering the economy towards its inflation and growth targets. The Bank of Japan (BOJ) stands as a pivotal institution in the global financial landscape, wielding considerable influence over the economic fortunes of Japan and, by extension, the broader global economy.
“While there might be factors we may not find out (about) until much later, there are factors we will know fairly soon such as changes in public sentiment,” Ueda said. “We’ll make sure not to be too behind the curve” in dealing with domestic inflation risks, he added. He offered few hints on the next rate-hike timing, but said the BOJ did not necessarily need to wait until everything is clear on the impact of US tariffs, in pulling the trigger. A key question for the BOJ is whether concerns about developments overseas might make it cautious enough to pause its rate hike path longer than the roughly six-month gap that BOJ watchers currently expect between each move. Ueda indicated little inclination to step into the market to stop the ascent, saying that now is not the time, while repeating the official stance that they’ll act if there are sudden moves.
But the uncertain US and global outlook makes it difficult to assess the potential impact on Japan’s economy,” Ueda told a press conference. The yen weakened as much as to 150 to the dollar following the release, but regained losses as Ueda spoke in the afternoon. The governor repeatedly said that domestic data were largely in line with the outlook, with wages coming in slightly stronger though within expectations. Economists said his comments didn’t necessarily rule out a hike at the next meeting. „Japan’s wage and price conditions are on track, possibly stronger than expected. But the uncertain U.S. and global outlook makes it difficult to assess the potential impact on Japan’s economy,” Ueda told a press conference.
Sources have told Reuters the BOJ is leaning toward keeping interest rates steady next week as policymakers prefer to spend more time scrutinising overseas risks and clues on next year’s wage outlook. But BOJ policymakers appear to be in no rush to pull the trigger with the yen’s rebound moderating inflationary pressure and uncertainty surrounding U.S. president-elect Donald Trump’s policies clouding the economic outlook. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result.
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