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Yen rebounds as markets await BoJ decision and projections
BoJ is expected to keep its policy rate at 1% and publish updated Outlook Report projections for growth and inflation.
Japanese yen traders are shifting focus to the Bank of Japan's monetary policy announcement on Friday after the yen rebounded sharply during Thursday’s American session, following speculation that Japanese authorities may have intervened in the FX market.
FXStreet reports that USD/JPY fell from above 163.00 to below 158.00 within minutes, changing the near term backdrop ahead of the BoJ meeting. While the BoJ is widely expected to leave its policy rate unchanged at 1%, markets will watch Governor Kazuo Ueda’s press conference and the updated economic projections for any signal that could reinforce the yen’s recovery.
The BoJ’s decision comes after its June rate hike, which gave policymakers room to evaluate the impact of tighter financial conditions. Another immediate move appears unlikely, but markets continue to expect additional tightening before year end, with October and December described as the main candidates.
In addition to the policy decision, the BoJ will publish its quarterly Outlook Report with refreshed forecasts for economic growth and inflation. The report could revise growth forecasts higher based on resilient domestic activity and demand tied to artificial intelligence investment, while inflation forecasts may be adjusted slightly lower due to government subsidies and softer energy prices. FXStreet also notes that a lower inflation forecast would not necessarily mean a more dovish stance, because policymakers are expected to emphasize that underlying price pressures could remain stronger than projected, and Tankan survey expectations point to inflation staying above the 2% target over the coming years.
Latest closeUSD/JPY 159.74 ▼2.5%