Ueda Holds Interest Rates, Yen Under Pressure
The Japanese yen weakened again against the dollar after comments from Bank of Japan Governor Kazuo Ueda were deemed insufficiently aggressive by market participants. In a press conference following the central bank's decision to maintain interest rates, Ueda stated that monetary policy would not be immediately changed simply because of the surge in inflation, largely driven by rising food prices. He also emphasized that the yen's current movement remained consistent with the central bank's outlook.
This statement immediately cooled market expectations, which had been hoping for a strong signal regarding an imminent interest rate hike. Many investors believed the BOJ was remaining overly cautious and influenced by past concerns about overly tight policy. Ueda's comments put pressure on the yen, while analysts noted that the central bank appeared unprepared to take more decisive action.
Meanwhile, political uncertainty in Japan also worsened market sentiment. Prime Minister Shigeru Ishiba's future is under scrutiny after his coalition lost its majority in the upper house of parliament. This situation has raised concerns about increased government spending, which could put further pressure on the yen. This situation was exacerbated by US President Donald Trump's recent move to impose high tariffs on Japanese goods, increasing external pressure on the country's economy.
However, there are indications that the Bank of Japan is still considering the possibility of a future interest rate hike. The recent trade agreement between Japan and the US is considered to alleviate some of the uncertainty that has been weighing on the BOJ. However, Ueda cannot yet confirm when the full impact of the new tariffs will be seen. With various global and domestic uncertainties still looming, the central bank is choosing to remain cautious in determining its next policy direction.(ayu)
Source: Newsmaker.id
