BoJ’s Ueda: Interest rate Policy in 2024 hinges on data

BoJ’s K. Ueda gave fresh statements on the central bank’s policy outlook, although he declined to comment on the recent performance of the Japanese yen.

Before Thursday’s European session begins, the Japanese Yen was still weak relative to the US dollar and is trading barely above a multi-decade low that was reached last week. Key elements undermining the safe-haven JPY include the Bank of Japan’s (BoJ) dovish stance, which states that monetary policy will remain easy for some time, and a positive risk tone. Nevertheless, fears that the Japanese government will meddle in the market to support the national currency prevent the JPY bears from making large wagers.

On the other hand, the US dollar continues for the third day in a row its corrective retreat this week from its highest level since February 14 due to the lack of clarity surrounding the Fed’s rate-cutting trajectory. This helps to maintain the USD/JPY pair below the 152.00 level even more. However, the idea that the difference between US and Japanese rates will remain large has buffered the fall. It’s possible that traders would rather stay out of the market before Friday’s release of the important US NFP report.

Key Quotes

“Chance of sustainably, stably achieving BoJ’s 2% inflation target is in sight, likely to keep heightening”.

“BoJ will adjust level of interest rates in accordance to distance towards sustainably, stably achieving 2% inflation.”

“Whether to raise interest rates again this year will be dependent on data”.

“If we become more convinced that trend inflation will approach 2%, that will be one reason to adjust interest rates”.

“If FX moves appear to have impact on wage-inflation cycle in a way that is hard to ignore, we could respond via monetary policy.”

“No comment on recent currency moves.”