The Japanese yen saw a significant rise on Friday after dropping to its lowest level in five months against the U.S. dollar. This movement followed the release of the summary of the Bank of Japan’s December monetary policy meeting, which revealed a shift among some policymakers toward a potential rate hike in the near future.
Several Bank of Japan members noted that conditions are aligning for a decision to raise interest rates soon. One of them even anticipated that the move could happen very soon, keeping the possibility of an announcement during the January meeting alive.
The Bank of Japan decided to maintain the interest rate at 0.25% in its latest meeting. Governor Kazuo Ueda explained that the decision was driven by the need for more data on next year’s wage growth expectations, as well as a clearer understanding of the incoming U.S. administration’s economic policies.
The Bank of Japan also announced a reduction in its monthly purchases of Japanese government bonds by 410 billion yen, bringing the total to approximately 4.5 trillion yen per month starting in January.
The Japanese yen had been under pressure in recent weeks due to rising U.S. Treasury yields, despite the Federal Reserve cutting interest rates by 100 basis points since September.
