The Japanese Yen (JPY) weakens for the sixth consecutive day against the US Dollar with the USD/JPY pair surging to its highest level in over four months after the Bank of Japan (BoJ) kept its short-term interest rate steady at 0.50% for a fourth consecutive meeting, as widely expected, but the accompanying tone and forward guidance triggered a notable dovish market reaction.

At the time of writing, USD/JPY is edging higher, breaking decisively above the key psychological barrier at 150.00 and hovering near 150.72 during American trading hours, up nearly 0.85% on the day.

At the BoJ press conference on early Thursday, Governor Kazuo Ueda explained that the BoJ had unanimously decided to keep the short‑term interest rate steady, while raising its core consumer inflation forecast for the current fiscal year to 2.7%, up from 2.2% previously. Governor Ueda emphasized that any future interest rate hikes would be data-dependent, and the BoJ would not necessarily wait until underlying inflation reaches the 2% target before acting.

Instead, the central bank would respond once it becomes "highly likely" that inflation will sustainably hit that level, especially if accompanied by stronger wage growth. While acknowledging that the inflation trend is improving, Ueda noted that much of the price pressure remains supply-driven, particularly due to elevated food costs. He warned that premature tightening could suppress domestic consumption, which remains fragile.

(cay)

Sumber: Fxstreet