The Bank of Japan decided on no change in interest rate policy at today’s monetary policy meeting.
At the post-meeting press conference, the Bank focused on a Yomiuri Shimbun interview with Governor Ueda in which he said that lifting negative interest rates by the end of the year was an option, but the Governor stressed that this was conditional on the realisation of the price target being foreseeable and that “the current situation is not foreseeable”,
He also stated that “the current situation is not promising” and that “it is not possible to make a definitive decision on the timing of the policy revision”.

As a result of this, all expectations of a lifting of negative interest rates by the end of the year were ruled out, and the 10-year JGB rate fell and the exchange rate for the dollar/yen recovered to the ¥148 level.
However, investors remain cautious about buying higher, as the USD/JPY exchange rate could intervene by the Ministry of Finance at any time. However, today’s press conference has shown that the only directional direction is to weaken the yen, and it is likely that the yen will move higher in a matter of time.

With US interest rates rising, the dollar is also likely to have room to rise against the euro and the pound. This is particularly the case for the Bank of England, which was forced off its rate hike after CPI and non-manufacturing PMIs released the day before yesterday fell sharply. The pound sold off in response and is likely to continue to test the downside.