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USD/JPY rebounds to 160.60 after sharp drop and BOJ meeting

The Bank of Japan left its policy rate unchanged at 1.0% and revised its fiscal 2026 core inflation forecast down to 2.5% from 2.8%.

Reported · Written up by our desk · Major Pairs

USD/JPY rebounded to 160.60 on Friday after a sharp drop the previous day, with market participants attributing the move to a suspected Bank of Japan intervention to support the yen, though the central bank provided no official confirmation, according to Action Forex.

The Bank of Japan held its policy meeting and kept its policy rate unchanged at 1.0%, a decision that matched market expectations and was passed by a vote of eight to one. Board member Hajime Takata dissented, arguing for additional tightening and warning that stronger demand pressures tied to the Middle East conflict could accelerate inflation.

In its quarterly outlook, the BOJ lowered its core inflation forecast for fiscal year 2026 to 2.5% from 2.8%, citing a gradual weakening of the impact from previously elevated oil prices. At the same time, it slightly raised its fiscal 2026 GDP growth forecast to 0.6% from 0.5% on robust domestic demand and government measures aimed at reducing household energy spending over the summer.

For fiscal year 2027, the BOJ lifted its core inflation forecast to 2.4% from 2.3% while trimming GDP growth expectations to 0.8% from 0.9%, leaving traders to weigh the central bank’s mixed guidance alongside ongoing geopolitical uncertainty and speculation about additional yen support.

Latest closeUSD/JPY 157.40 ▼1.7%

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