Analysts noted that the Japanese yen weakened against the U.S. dollar as the Bank of Japan (BOJ) failed to provide clear guidance on the timing of future monetary tightening. The central bank raised its benchmark interest rate to the highest level since 1995, in line with expectations. Following the latest policy decision, Japanese government bond yields rose, with the 10-year yield surpassing 2% for the first time since 2006. After BOJ Governor Kazuo Ueda's press conference, the yen declined roughly 0.8%, with USD/JPY hovering near 156. Below are analysts' views:
James Athey, Portfolio Manager at Marlborough Investment Management: Similar to past hikes, the BOJ remains cautious in tightening policy. The impression is that they aim to appear hawkish without significantly impacting markets—avoiding blame for adverse effects later. Few investors are willing to take long-yen risks during holidays without strong justification, and Governor Ueda provided none. Many still see 160 as the intervention threshold, so a breach would be surprising.
Neil Newman, Head of Strategy at Astris Advisory Japan: The move was too late and insufficient. With the Fed likely cutting rates twice more, the BOJ may need to lift rates to 1.25%-1.5% next year to counter yen weakness. Markets cheered the hike, contrasting with 2024’s 0.25% hike blamed for a stock crash. The Topix Banks Index is up 40% YTD and 10% MoM—perhaps time to exit and seek new opportunities.
Elias Haddad, Global Market Strategist at Brown Brothers Harriman: The yen weakened post-BOJ as the bank left its neutral rate range unchanged, signaling continued accommodative policy. However, this stance is unconvincing, and the yen is unlikely to break key support. The hike was hawkish: the BOJ warned of persistent wage-inflation risks, and Governor Ueda noted rates remain below the neutral range’s lower bound (estimated at 1%-2.5%).
Junichiro Morimoto, Senior Analyst at Sony Financial Group: The policy statement and Ueda’s remarks included hawkish hints, but markets sold the yen. With Christmas approaching, volatility should stay muted. USD/JPY lacks momentum to test 160; year-end close likely near 155.
Felix Ryan, Strategist at ANZ Group Holdings: Despite expecting a 25bps BOJ hike in April 2026, the yen may lag G10 peers due to unfavorable yield differentials. We forecast USD/JPY at 153 by end-2026.
Hiroshi Namioka, Chief Strategist at T&D Asset Management: Yen softness and equity gains reflect pre-announcement overcaution. The BOJ emphasized low real rates post-hike, implying a terminal rate above 0.75% and further tightening.
Rong Ren Goh, Fixed Income Portfolio Manager at Eastspring Investments: The BOJ’s tolerance for economic "overheating" before tightening raises risks of steeper hikes later. Without clear forward guidance, markets may keep pricing lag risks.
Masahiro Yamaguchi, Head of Investment Research at SMBC Trust Bank: Yen fell on expectations of negative real rates persisting, boosting equities. The Topix Banks rally suggests profit-taking may be due.
Eugenia Fabon Victorino, Asia Strategist at SEB Singapore: The statement didn’t rule out further hikes but offered no pace change. The next hike is unlikely before June/July 2027. Markets are accustomed to gradual BOJ moves. Long USD/JPY is prudent absent clearer signals; a drop to 152 hinges on a Q1 dollar pullback.
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