The background of policy moves from the Bank of Japan going into today's meeting were two rate hikes this year:
March 2024: The BOJ ended its long-standing negative interest rate policy, which had been in place to combat deflation and stimulate economic growth. This move marked the first rate increase in 17 years, signaling a shift towards policy normalization.The BOJ raised its short-term policy interest rate to 0.1%, effectively moving away from the negative rate of -0.1% that had been maintained since 2016.
July 2024: The central bank raised its short-term policy interest rate to 0.25%, further moving away from its ultra-loose monetary stance. This adjustment aimed to balance economic growth with rising inflationary pressures.
The Bank was widely expected to hold today, although further hikes are expected in 2025.
The decision:
The yen has lost ground, adding to its weakness since the Federal Reserve's Federal Open Market Committee (FOMC) cut but signalled its own pause:
