{ "id": 60229, "date": "2026-01-23T10:02:30", "date_gmt": "2026-01-23T03:02:30", "guid": { "rendered": "https:\/\/hbbgroup.net\/bank-of-japan-poised-to-hold-rates-as-markets-assess-scope-for-further-hikes\/" }, "modified": "2026-01-23T10:02:30", "modified_gmt": "2026-01-23T03:02:30", "slug": "bank-of-japan-poised-to-hold-rates-as-markets-assess-scope-for-further-hikes", "status": "publish", "type": "post", "link": "https:\/\/hbbgroup.net\/en_us\/bank-of-japan-poised-to-hold-rates-as-markets-assess-scope-for-further-hikes\/", "title": { "rendered": "Bank of Japan poised to hold rates as markets assess scope for further hikes" }, "content": { "rendered": "
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The Bank of Japan (BoJ) is expected to leave its benchmark interest rate unchanged at 0.75% after concluding its two-day monetary policy meeting next Friday.<\/p>\n

The Japanese central bank hiked rates to its highest level in three decades in December, and will likely stand pat on Friday to better assess the economic consequences of previous rate hikes.<\/p>\n

BoJ Governor Kazuo Ueda is expected to reiterate the bank\u2019s commitment to further monetary policy normalisation. In that sense, investors will analyze Ueda\u2019s press conference with particular attention for further insight into the timing and the scope of the bank\u2019s tightening cycle.<\/p>\n

What to expect from the BoJ interest rate decision?<\/strong><\/h2>\n

The BoJ is widely expected to keep interest rates unchanged in January and hint at further monetary policy tightening if the economy evolves in line with the bank\u2019s projections.<\/p>\n

In December, the bank\u2019s monetary policy committee approved a 25 basis points rate hike to the current 0.75% level, and the minutes of the meeting revealed that some policymakers see the need for further monetary tightening, as real interest rates remain deeply negative, taking inflation into account.<\/p>\n

A back-to-back rate hike, however, is completely discarded by the market. More so after Prime Minister Sanae Takaichi\u2019s unexpected call for snap elections earlier this week and her plans to suspend taxes on food and beverages for two years, aiming to help households coping wth the rising inflationary trends.<\/p>\n

It is still unclear what impact these actions will have on the central bank\u2019s monetary policy, but the BoJ plans to gradually normalize its monetary policy and remove the monetary stimulus measures without damaging economic growth. Against this backdrop, the bank will opt to wait until the political scenario clarifies and the consequences of previous rate hikes manifest before tightening its monetary policy further.<\/p>\n

The Yen, on the other hand, has been depreciating steadily since market speculation about a snap election arose. It will be interesting to see whether JPY weakness has prompted the central bank to adopt a less ambivalent stance towards monetary tightening.<\/p>\n

How could the Bank of Japan’s monetary policy decision affect USD\/JPY?<\/strong><\/h2>\n

Investors are fully pricing a BoJ rate pause on Friday, but the bank will need to make a clear commitment towards a further monetary tightening cycle to stem the current Yen depreciation.\u00a0<\/p>\n

Yen bears have taken a breather over the last few days, favoured by broad-based US Dollar weakness, amid the European Union (EU)-US trade rift after President Donald Trump\u2019s threats to annex Greenland. USD\/JPY, however, remains about 0.7% up on the year and relatively close to the 18-month high near 159.50 hit last week.<\/p>\n

Investors fear that Prime Minister Takaichi might gain a stronger parliamentary support after the elections to expand her policy of big spending and lower taxes, adding pressure on the country\u2019s strained public finances. This has sent the Yen tumbling and long-term Japanese yields rallying to record highs, amid fears of an upcoming fiscal crisis.<\/p>\n

Recent comments by BoJ Governor Ueda have reaffirmed the bank\u2019s gradual monetary-tightening rhetoric, indicating that Japan is moving toward a more durable inflation regime, with a mechanism in place for wages and prices to rise in tandem. The Yen will need clear signs of rate hikes ahead to extend a hitherto fragile recovery.<\/p>\n

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\"USD\/JPY<\/p>\n<\/div>

USD\/JPY 4-Hour Chart<\/figcaption><\/figure>\n

From a technical perspective, Guillermo Alcal\u00e1, analyst at FXStreet, sees the\u00a0 USD\/JPY pair on a bearish correction, with key support above the 157.40 area: \u201cThe pair has retreated from highs, but Yen bulls would need to break the support area between 157.40 and 157,60, to cancel the near-term bullish structure and aim for the early January lows, around 156.20.\u201d<\/p>\n

A hesitant BoJ message would disappoint markets and undermine support for the Yen. In that case, Alcal\u00e1 sees the pair reaching fresh long.-term highs: \u201cTechnical indicators are turning positive. The 4-Hour RGI has bounced up from the 50 line, highlighting a stronger bullish momentum. The pair is testing resistance at\u00a0 158.70 (January 16 high) at the time of writing, which is the last barrier before the 18-month high near 159.50.\u201d<\/p>\n

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Bank of Japan FAQs<\/h2>\n
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The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.<\/p>\n<\/section>\n

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The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank\u2019s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.<\/p>\n<\/section>\n

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The Bank\u2019s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ\u2019s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.<\/p>\n<\/section>\n

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A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ\u2019s 2% target. The prospect of rising salaries in the country \u2013 a key element fuelling inflation \u2013 also contributed to the move.<\/p>\n<\/section><\/div>\n<\/p><\/div>\n

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Economic Indicator<\/h2>\n
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BoJ Interest Rate Decision<\/h3>\n

The Bank of Japan<\/a> (BoJ) announces its interest rate decision after each of the Bank\u2019s eight scheduled annual meetings. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and raises interest rates it is bullish for the Japanese Yen (JPY). Likewise, if the BoJ has a dovish view on the Japanese economy and keeps interest rates unchanged, or cuts them, it is usually bearish for JPY.<\/p>\n

Read more.<\/span> <\/a> <\/div>\n

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Next release:<\/strong> Fri Jan 23, 2026 03:00 <\/span> <\/p>\n

Frequency:<\/strong> Irregular<\/span> <\/p>\n

Consensus:<\/strong> 0.75%<\/span> <\/p>\n

Previous:<\/strong> 0.75%<\/span> <\/p>\n

Source:<\/strong> Bank of Japan<\/span> <\/svg> <\/a> <\/p>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<\/div>", "protected": false }, "excerpt": { "rendered": "

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