BoJ Holds Rates Steady as Japan Intervenes to Defend Yen

The Bank of Japan (BoJ) held interest rates steady at 1.0% on Friday, as expected by markets. This decision came after a reported major intervention in the yen, which briefly gained 3.5% overnight against the US dollar.

The BoJ warned that CPI inflation headwinds will increase in the second half of 2026, with the year-on-year rate of increase in the consumer price index likely to accelerate above 2%. The bank also mentioned that the effects of high crude oil prices are waning due to the ongoing US-Iran war and closure of the Strait of Hormuz oil-transit route.

The yen's recent volatility has been attributed to central bank intervention, with some analysts suggesting a joint effort between Japan and South Korea. Lee Min-hyuk, an analyst at KB Kookmin Bank, stated that 'the interests of each country aligned' in this cooperation.