JPY weakened against other major currencies in the European session on Tuesday as investors reacted negatively to the outcomes of the Bank of Japan’s (BOJ) policy meeting.
At its final meeting of 2023, the Japanese central bank decided by a unanimous vote to keep its negative -0.1% interest rates unchanged, as widely anticipated. In addition, the BoJ made no change to its policy guidance, shattering some investors’ hopes for an alteration in its dovish language to signal a near-term move away from ultra-loose policy.
Commenting on the BoJ’s latest policy decision, the central bank’s governor Kazuo Ueda stated that the possibility of trend inflation accelerating towards the 2% price target is gradually heightening but insisted that the rate-setters should look at more data for evidence of whether this threshold would be met. The BoE’s chief also indicated that there is little chance that the central bank will change policy next month but acknowledged that he cannot rule out the possibility that the decision to raise rates might come at a surprise for markets. In addition, Ueda stressed that the BoJ wouldn’t make its policy decisions based on what it thinks the Federal Reserve might do in three or six months' time.