BOJ Under Pressure: Amid Yen Decline, Decision on Rate Hikes Looms

The Bank of Japan (BOJ) has maintained its short-term interest rate at 0.25% amid uncertainties surrounding U.S. economic policies. However, there was one dissenting vote advocating for a rate increase. With the yen declining and inflation concerns rising, the BOJ considers gradual rate hikes into early 2025.

In a keenly anticipated move, the Bank of Japan decided to keep its interest rate steady at 0.25% during a board meeting, reflecting caution in light of the current global economic climate. The nine-member board's decision was almost unanimous, with just one member proposing a hike to curb inflation risks.

BOJ Governor Kazuo Ueda acknowledged the presence of emerging risks tied to potential trade policy changes under U.S. president-elect Donald Trump. The stability of the real interest rate and the future trajectory of monetary policy are contingent upon detailed economic data analyses, Governor Ueda confirmed at a subsequent press conference.

Markets are now closely watching the yen's performance, which fell to a one-month low against the dollar, alongside anticipation around BOJ's next interest rate decision. With inflationary pressures mounting due to the yen's weakness, investors are speculating on a possible rate hike as early as the beginning of 2025, fueled by the Federal Reserve's recent hawkish stance.

(With inputs from agencies.)