BOJ Holds Rates, Yen Gives Back Intervention Gains
The Japanese Yen weakened on Friday after suspected currency intervention triggered a sharp rally in the previous session. The Bank of Japan left interest rates unchanged at 1.00%, as widely expected.
The Yen had surged by as much as 3% on Thursday, briefly driving USD/JPY below 158 from levels above 163, as traders reported heavy official Yen buying in the New York market.
The decision to maintain rates was approved by an 8-1 majority, with board member Hajime Takata dissenting in favour of an immediate 25-basis-point increase to 1.25%. The BoJ had already raised its policy rate to a 31-year high in June.
The accompanying Monetary Policy Statement and quarterly Outlook Report contained a more hawkish assessment of inflation risks, warning that underlying inflation could move above its 2% target as inflation expectations rise and companies become increasingly willing to increase wages and prices.