SINGAPORE — The yen edged marginally higher on Thursday following the Bank of Japan’s upward revision to its inflation forecasts and cautiously optimistic view on the economic outlook, even as it chose to stand pat on rates.
At the conclusion of its two-day policy meeting, the BOJ kept short-term interest rates steady at 0.5 percent in a unanimous vote, although revising up this fiscal year’s core consumer inflation forecast to 2.7 percent, from 2.2 percent three months ago.
The yen was choppy in the aftermath of the decision before turning decisively higher. It was last 0.5 percent higher at 148.78 per dollar.
“There is definitely a clear justification for them to hike rates,” said Khoon Goh, head of Asia research at ANZ.
“Now, the fact that Japan has finally reached a deal with the US does remove some element of that uncertainty for themselves. So I think the question is whether the BOJ is now prepared to hike in October.”
Focus now turns to Governor Kazuo Ueda’s press conference later in the day for further clues on the timing of the BOJ’s next rate hike.
In the broader market, the dollar flirted with a two-month peak after Federal Reserve Chair Jerome Powell stuck to his patient approach on rates in a closely watched policy decision and offered little insight on when they could be lowered.
The greenback was also on track for its first monthly gain for the year, bolstered by a hawkish Fed and US economic resilience, with uncertainty over tariffs beginning to ease given recent trade deals struck by Washington.
Against a basket of currencies, the dollar was last steady at 99.84, not far from a two-month peak hit in the previous session. The dollar index was set for a monthly gain of about 3.2 percent.
US President Donald Trump’s chaotic tariffs and fears of the dollar’s demise earlier this year had undermined the currency and given it the worst start to the year since the floating exchange rate period. Those worries have since abated, easing pressure on the dollar.
