Yen Rises As BoJ's Tamura Signals Rate Hikes
06 February 2025 - 4:59PM
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The Japanese yen strengthened against other major currencies in
the Asian session on Thursday, as the Bank of Japan board member
Naoki Tamura hinted about possible interest rate increases.
Speaking at an event in Nagano, BOJ's Tamura said interest rates
could rise from 0.5 percent to 1 percent in the second half of
2025. Considering 1 percent to be a neutral rate, he underlined the
necessity of modest rate increases to ascertain the ideal level for
Japan's economy.
In January, the BOJ raised interest rates by 25 basis points to
0.5%, pointing to rising consumer expenditure and wages as the main
causes of inflation. As it keeps an eye on the state of the
economy, the central bank expects more rate increases.
Tamura assured that the forthcoming wage negotiations would be
consistent with the Bank of Japan's 2% inflation target, thereby
providing further rationale for incremental rate adjustments.
In the Asian trading today, the yen rose to near 2-month highs
of 157.92 against the euro and 151.80 against the U.S. dollar, from
yesterday's closing quotes of 158.73 and 152.58, respectively. The
yen may test resistance around 153.00 against the euro and 149.00
against the greenback.
Against the pound and the Swiss franc, the yen advanced to
nearly a 3-week high of 189.81 and more than a 2-month high of
168.50 from Wednesday's closing quotes of 190.79 and 169.21,
respectively. If the yen extends its uptrend, it is likely to find
resistance around 187.00 against the pound and 166.00 against the
franc.
Looking ahead, the Bank of England is set to announce its
monetary policy decision at 7:00 am ET. The BoE is expected to cut
its benchmark rate by a quarter-point to support economic
growth.
Markets widely expect the BoE to lower the bank rate to 4.50
percent from 4.75 percent. The BoE had reduced the rate by 25 basis
points each in August and November last year.
At 9:15 am ET, the BoE governor Andrew Bailey will deliver a
speech about the monetary policy decision at a press
conference.
In the New York session, U.S. weekly jobless claims data and
Canada Ivey PMI data for January are slated for release.
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