Home›Forex›Central Banks›Bank of Japan seen keeping gradual rate hikes amid sho…

Bank of Japan seen keeping gradual rate hikes amid shocks

Rabobank said Japan’s policy path is being shaped by tariff, war, and domestic political shocks, with oil prices and AI demand balancing headwinds.

Reported · Written up by our desk · Central Banks

Rabobank’s FX Strategy team assessed how the Bank of Japan is handling monetary policy, pointing to a slow rate-hike pace that it links to exceptional shocks including tariffs, war, and domestic political changes, according to an FXStreet write-up.

The analysis tied Governor Ueda’s message to continued rate increases as activity and prices improve, while noting that higher oil prices and AI-related demand offset each other.

Rabobank also said BoJ bond-buying tapering, which has been ongoing since 2024, has increased market focus on fiscal risks and JGB supply, adding pressure to the yen through concerns about the prime minister’s expansionary reputation.

It added that strategic use of government oil reserves and AI-driven demand have helped exports and production in Japan stay broadly flat despite higher energy prices and tariff-related uncertainty.

More like this

Sources