19 March 2024 | FXGT.com
Yen weakness continues following Bank of Japan’s decision to end its negative rates policy.
- Bank of Japan Shifts Monetary Policy: The BOJ marked a significant policy change by ending negative interest rates. This adjustment signals a new phase in Japan’s economic strategy.
- Interest Rate Differentials: The BOJ’s update to guide overnight call rates between zero to 0.1% maintains a cautious outlook, likely keeping the yen under pressure due to significant interest rate differences with the U.S.
- Market Reaction to BOJ’s Decision: Despite being the first interest rate hike in 17 years, Japan’s cautious approach towards further increases added further weakness to the yen. BOJ Governor Kazuo Ueda emphasized a gradual approach to any further policy adjustments, based on economic and inflation forecasts.
- Yen Weakness Continues: The yen’s depreciation continued, with a notable 1% fall against the dollar, suggesting that the BOJ’s pivotal decision had been largely anticipated due to prior indications and media speculation.
- Fed and Other Central Bank Meetings: The Federal Reserve’s meeting conclusion on Wednesday, along with the upcoming meeting from the Bank of England are highly anticipated. Despite expectations for steady rates, speculation remains for potential policy changes.
- Market Adjustments to Fed Expectations: Following recent inflation data, traders have adjusted their forecasts for Federal Reserve rate cuts in 2024, with a reduced likelihood of cuts starting in June according to the CME FedWatch tool.
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