BOJ to boost the yen this Friday?

  • The Bank of Japan (BoJ) is unlikely to implement a rate hike during the upcoming announcement, but speculation suggests potential strategies to support the yen.

In addition to the eagerly awaited US data slated for release this week, investors will be keeping a close eye on the Bank of Japan’s interest rate decision scheduled for Friday.  

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Market expectations lean towards the BOJ maintaining its current rate settings during Friday’s announcement. However, analysts and investors will scrutinize the central bank’s commentary for insights into its stance on inflation, as well as indicators like consumption and wages.   

A recent forecast from the Japan Center for Economic Research suggests that a majority of economists anticipate at least one more rate hike from the BOJ before year end.  

Some market observers speculate that the BOJ’s next rate adjustment could be influenced by the depreciation of the yen.  

However, Bank of Japan Governor Kazuo Ueda has dismissed this speculation, asserting that this won’t directly dictate the central bank’s monetary policy decisions. Ueda remains optimistic about wage growth prospects and hints at the possibility of another rate hike if trend inflation shows signs of reaching their projected level.  

While we may not see a rate hike this Friday, Deutsche Bank does speculate that BoJ might be able to support the Yen by either removing its JGB purchasing guidelines from its statement or revising them to enhance the flexibility of its purchasing operations    

    

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