The Bank of Japan kept its policy rate at 1.25% but signalled further hikes, and the yen held relatively steady against a weaker dollar. Traders now price around an 80% chance of another increase in December.
The yen held relatively steady on Friday after the Bank of Japan left its policy rate unchanged at 1.25% while renewing its readiness to raise rates further. The dollar weakened as renewed selling in AI stocks triggered demand for safe-haven bonds.
BOJ holds on an 8-1 vote
The board voted 8-1 to hold and raised its inflation forecast. Board member Hajime Takata dissented, calling instead for a 25-basis-point hike to 1.50%.
The decision turns attention to December. Traders are pricing in around an 80% chance of another rate hike then.
Dollar slips, yen set for a small monthly loss
The USD/JPY pair slipped 0.1% to 157.60. The yen remains on course for a roughly 0.2% monthly decline against the dollar.
The U.S. dollar index fell 0.2% to 101.81. Even so, it stayed on track for a 0.3% gain in October, a second consecutive monthly advance.
Central banks hold, with more tightening not ruled out
The BOJ's pause followed holds by the Federal Reserve, the European Central Bank and the Reserve Bank of New Zealand this week. Those banks are taking time to assess persistent inflation and tighter financial conditions. However, elevated energy prices and the lack of progress toward resolving the Middle East conflict mean further tightening has not been ruled out.
The Bank of England and the Reserve Bank of Australia will be in focus next week.
Source: Investing.com
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