Today, in the first part of the day, we learned about the minutes of the BOJ's October interest rate decision. The Bank of Japan emphasized its cautious approach to raising rates. Although forex market volatility is moderate today, the JPY is recording slight gains, limited to 0.00-0.15%.
- The Bank of Japan (BOJ) maintained its interest rate at a constant level of 0.25% in October (minutes) and again in December.
- Policymakers signaled that gradual rate hikes could occur if inflation trends remain at an appropriate level.
- However, further hikes are expected to proceed at a moderate pace.
- Concerns about U.S. policy and global economic uncertainty have led the BOJ to take a cautious approach to monetary policy.
- Domestic conditions remain moderately positive: wages and consumption are expected to stay high.
During the decision, Ueda mentioned that new survey data on wages will be available around March/April, which may result in delaying further hikes by a few more months. Investors' reaction to the BOJ's dovish tone was muted. The yen initially weakened to around 157.40 against the U.S. dollar. Ultimately, markets were not surprised by the minutes, and USDJPY retraced to 157.20 after the publication.
Looking ahead, much will depend on changes in U.S. policy under the new administration and their impact on global economic conditions. BOJ policymakers emphasized the importance of stable wage growth to support consumption and sustain the inflation rate. Therefore, from this perspective, next year's spring wage negotiations will be a key event.
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