As expected, the Bank of Japan left its key interest rate unchanged at 0.25% at the end of its meeting this morning. It's a way of acknowledging the current political risks, given the uncertain outcome of the parliamentary elections at home and the upcoming US elections, Commerzbank’s FX analyst Volkmar Baur notes.
JPY may start to weaken again
“The Bank of Japan also left its economic forecasts pretty much the same as they were three months ago. Next year's growth was revised up a little, while inflation expectations for the coming year were revised down a little in the wake of lower energy prices. The Bank of Japan still thinks rates should go up if the economy keeps growing as expected.”
“We're still waiting to hear why. They're expecting growth of around 1% and inflation of 1.9%. Other central banks would probably be happy – job done – and would simply wait and see how the economy develops, in order to be able to react to any unforeseen events by tightening or loosening. It's not clear why they're pushing to raise interest rates when the forecasts show that price stability will be achieved.”
“I can see this desire to raise interest rates again leading to a further interest rate hike in December. This would also make the yen stronger in the meantime. I don't think there'll be any more interest rate hikes next year though, which should mean the JPY will start to weaken again.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. 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. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD hung out to dry on familiar low end
AUD/USD tried and failed to spark a bull run during the first trading session of 2025, rising on thin volumes before collapsing back into the 0.6200 handle in the later hours of the day. A broad-market push into the safe haven Greenback kept the Aussie pair on the defensive, and the AUD is mired in congestion on the weak side of two-year lows.
USD/JPY flirts with multi-month highs in the 158.00 region
The USD/JPY pair traded as high as 157.84 on Thursday, nearing the December multi-month high of 158.07. Additional gains are on the docket amid prevalent risk aversion.
Gold flat lines above $2,650 ahead of US PMI release
Gold price consolidates its gains near $2,660 after reaching a two-week high during the early Asian session on Friday. The safe-haven flows amid the geopolitical tensions provide some support to the precious metal.
Could XRP surge to new highs in January 2025? First two days of trading suggest an upside bias
Ripple's XRP is up 7% on Thursday, extending its rally that began during the New Year's Day celebration. If long-term holders continue their recent accumulation, XRP could overcome the $2.9 resistance level and aim for a new all-time high.
Three Fundamentals: Year-end flows, Jobless Claims and ISM Manufacturing PMI stand out Premium
Money managers may adjust their portfolios ahead of the year-end. Weekly US Jobless Claims serve as the first meaningful release in 2025. The ISM Manufacturing PMI provides an initial indication ahead of Nonfarm Payrolls.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.