Bank of Japan Keeps Policy Unchanged Shifting Focus to the Press Conference

Highlights

• On Tuesday, the Bank of Japan left interest rates unchanged at -0.10%.
• Board members unanimously voted to keep the yield curve control policy unchanged.
• The Bank of Japan press conference is up next.

The Bank of Japan Leaves Interest Rates Unchanged

On Tuesday, the Bank of Japan left interest rates unchanged at -0.10%, as per forecasts. Notably, the Board voted unanimously to keep interest rates in negative territory.

According to the Bank of Japan Monetary Policy Statement,

• The Bank of Japan left 10-year JGB yields at around 0%.
• There were also no tweaks to the Yield Curve Control (YCC) policy.
• “Extremely high uncertainties about economies and financial markets, the Bank will patiently continue with monetary policy easing while nimbly responding to developments in economic activity as well as financial conditions.”
• The Bank will continue to maintain the stability of financing, mainly of firms, and financial markets, and will not hesitate to take additional easing measures if necessary.

The statement showed no immediate intention to pivot from negative interest rates, impacting the buyer appetite for the Yen. However, the Press Conference could move the dial. Bank of Japan Governor Kazuo Ueda recently discussed a willingness to exit negative rates without wage growth materializing.

USD/JPY Reaction to the Bank of Japan Monetary Policy Statement

The USD/JPY fell to a Tuesday session low of 142.245 before steadying.

In response to the Bank of Japan policy decision and policy statement, the USD/JPY surged from 142.637 to a morning high of 143.782 before easing back.

This morning, the USD/JPY was up 0.46% to 143.421.

The Fed and the US Housing Sector in Focus

On Tuesday, US housing sector numbers need consideration. Economists forecast US housing starts and building permits to decline by 0.8% and 1.2%, respectively, in November.

However, investors must also consider Fed chatter. Hawkish comments could temper market bets on a Q1 2024 Fed rate cut. Near-term USD/JPY trends could hinge on the Bank of Japan press conference and US economic indicators. On Friday, personal outlays and inflation could impact bets on a Q1 2024 Fed rate cut.