USD/JPY traders prepare for Friday’s BoJ meeting

Bank of Japan (BOJ) Governor Kazuo Ueda noted it was “appropriate to keep easy monetary conditions for now as underlying inflation is still below 2.0%”. Ueda cautioned “If the price trend rises toward 2.0% in line with our outlook…it will mean raising the short-term interest rate,” according to a note by private investment bank Brown Brothers Harriman (BBH).

The Bank of Japan’s (BoJ) April policy meeting takes place on Friday. It is unlikely the BoJ will increase interest rates at the meeting but there is a chance it may reduce Japanese Government Bonds (JGB), which would be viewed as hawkish, JPY positive, and bearish for USD/JPY.  

If the BoJ delivers a hawkish hold on Friday it is unlikely the Japanese authorities will intervene to prop up the Yen, according to BBH. 

“The BOJ is widely expected to keep the policy rate target at 0 to 0.10%. However, the BOJ may raise slightly its 2024 core inflation projections implying greater room to tighten policy. Indeed, Japan’s April Jibun Bank Flash Composite PMI shows private sector growth quickening at the fastest pace in eight months and price pressures intensifying,” says BBH.