Yen strengthens as BOJ signals potential rate hikes

The Japanese yen strengthened past 154.5 per dollar on Thursday, marking its second consecutive day of gains following comments from Bank of Japan Deputy Governor Ryozo Himino.

Yen strengthens as BOJ signals potential rate hikes

He indicated that the central bank may raise interest rates if economic and inflation trends align with expectations. However, Himino emphasized that the BOJ will maintain an accommodative monetary stance for now due to ongoing domestic and external risks. At its January meeting, the BOJ raised its policy rate and updated its inflation forecasts, signaling the possibility of further rate hikes. Yet, minutes from the BOJ's December meeting revealed that the bank remains cautious about adjusting its policy, with decisions hinged on factors like inflation trends, wage growth, and global economic uncertainties.

Fed pauses rate cuts, cites elevated inflation

Meanwhile, as anticipated, the US Federal Reserve paused its rate-cutting cycle in January but highlighted that inflation remains "somewhat elevated."