Yen Weakens, Investors Await Japan Interest Rate Decision
The USD/JPY pair rose moderately to around 158.45 in early Asian trading on Friday. The Japanese yen weakened against the US dollar after the release of lower-than-expected Japanese inflation data, prompting investors to prepare for the Bank of Japan (BoJ) decision and Governor Kazuo Ueda's press conference.
Statistics Japan reported that the National Consumer Price Index (CPI) rose 2.1% year-on-year in December, the lowest since March 2022. Meanwhile, the National CPI excluding fresh food rose 2.4% year-on-year, in line with market consensus and also the weakest since October 2024. The CPI excluding fresh food and energy rose 2.9% year-on-year, a slight decrease from the previous month.
This decline in inflation has weakened the yen slightly as the market believes the BoJ may not need to raise interest rates any sooner. Cooler inflation indicates that price pressures are easing, reducing the urgency for monetary tightening.
Nevertheless, the BoJ is expected to maintain interest rates at 0.75% at the conclusion of its two-day meeting. Investors await further clues from Governor Ueda's press conference regarding the expected timing of the next interest rate hike, which is key to the yen's and the market's future direction. (az)
Source: Newsmaker.id
