News

According to an analysis report by the financial website Investinglive, cited by Odaily, the Bank of Japan raised interest rates by 25 basis points to 0.75%, in line with market expectations. This marks the highest level of Japanese interest rates in thirty years and highlights the Bank of Japan's gradual move away from its ultra-loose monetary policy. Given the continued strength of inflation data and increasingly confident signals from policymakers, the market has fully priced in the rate hike decision. From a market perspective, this policy adjustment lacked surprises, reducing the volatility risk that previous policy changes had caused. Unlike past instances that triggered significant unwinding of yen carry trades, the yen's reaction this time may be more influenced by policy guidance rather than the rate hike itself. The market's focus quickly shifted from the rate hike to the central bank's forward guidance and Governor Kazuo Ueda's assessment of future policy directions. During the press conference, Kazuo Ueda is likely to adopt a cautious tone, emphasizing that future adjustments will depend on whether inflation is sustainable and demand-driven. He is expected to stress the importance of wage growth, household consumption, and corporate investment, while also pointing out the recent rise in Japanese government bond yields and the necessity of avoiding financial market turmoil. (Golden Ten Data)

According to Odaily, Masahiko loo, Senior Fixed Income Strategist at State Street Global Advisors, stated that the market may interpret the Bank of Japan's rate hike as dovish, leading to short-term volatility in the yen. However, supported by the Federal Reserve's accommodative policy and Japanese investors increasing their hedge ratios from historical lows, the longer-term target of 135-140 remains unchanged. The focus now shifts to the tone and forward guidance of Bank of Japan Governor Kazuo Ueda's press conference—which is likely to be neutral, suggesting a gradual normalization in 2026-27, without being overly dovish or hawkish. Kazuo Ueda needs to maintain a delicate balance. (Golden Ten Data)

According to Odaily, the yield on 10-year Japanese government bonds rose by 3.5 basis points to 2%, reaching the highest level since May 2006. (Golden Ten Data)