USD/JPY Rises as Fed Tightens Guidance, BoJ Stays Vague
The Federal Reserve raised interest rates by 25 basis points to 3.75%-4.00% on September 16, followed by a similar move from the Bank of Japan on September 18, increasing its target rate to 1.25%, a 31-year high.
Despite matching moves, the USD/JPY currency pair rose after both decisions, indicating yen weakness and differing market implications between the two hikes.
The Fed's guidance was firmer, with 16 out of 18 policymakers projecting at least one more 25-basis-point increase this year, raising the end-2026 rate forecast to 4.10% from 3.80%, while the BoJ decision passed 7-2, but officials gave no timetable for further tightening.
The policy-rate gap remains around 250-275 basis points, with US 10-year Treasury yields at 5.17%, a high since 2006, versus Japan's 10-year yield of roughly 3.08%, the highest since 1996.
Japan conducted a rate check as USD/JPY moved above 158, a step linked to intervention, sharpening focus on the 160 area without a formal trigger level.