The Bank of Japan kept interest rates unchanged at 0.25% and in line with the markets' forecast; the decision was unanimous. However, the USDJPY pair tumbles almost 0.8% as markets see some 'hawkish' signal from BoJ report and Ueda comments.
- BoJ Governor Ueda indicated that expected inflation is likely to be lower in 2025, indirectly due to oil price reasons. Ueda stressed that the weak yen makes Japanese businesses perform better and are more likely to raise wages and prices.
- He also indicated that the currently loose monetary policy will be adjusted accordingly if the economy meets the BoJ's target for economic growth and prices; the bank expects that core CPI inflation will hoover at 2% level between fiscal 2024 - 2026 period.
- BOJ governor Ueda commented also on phrasing of 'needing time to scrutinise market risks' and signalled that BoJ needed to phrase it in such a way in August, but they do not have to do so now.
- According to Ueda, Japan economy is recovering moderately; sees continuing economic growth above potential. The BoJ governor also claims that price increases due to higher wages may be stronger than previously expected.
- Real GDP fiscal 2026 growth median forecast for Japan was lifted to 4% vs 1% in July; 2026 Core CPI growth pace unchanged at 2.1%. Currently, the USDJPY pair is dropping to 152.1 zone.
USDJPY (D1 interval)
Source: xStation5
