Investors react to BOJ’s decision to keep rates stable By Reuters

(Reuters) – The Bank of Japan held interest rates steady on Thursday as policymakers preferred to exercise caution in raising borrowing costs amid uncertainty over the U.S. president-elect’s economic plans. Donald Trump.

As widely expected, the nine-member BOJ board decided to keep its official short-term interest rate unchanged at 0.25%. But the most hawkish member of the board of directors, Naoki Tamura, disagreed and proposed raising interest rates to 0.5%, considering that inflationary risks were building. His proposal was rejected.

QUOTES:

ALVIN TAN, HEAD OF ASIA FX STRATEGY, RBC CAPITAL MARKETS, SINGAPORE

“I would have thought that given the Fed’s somewhat hawkish statement, you could argue that it actually helps the BOJ provide a little bit more hawkish guidance as well… but that didn’t happen.

“We still have Governor (Kajuo) Ueda’s press conference coming up. But overall, if he doesn’t commit to the imminent increases, then I think he would be blatantly dovish.”

SHOKI OMORI, CHIEF JAPAN STRATEGIST, MIZUHO SECURITIES, TOKYO

“Monetary policy has remained as expected.”

“As the economic assessment remained unchanged, the pair briefly touched 155 after the release of the statement. The question now is to what extent the yen will sell off against major currencies from now on. If the USD pair /JPY easily surpasses the defense lines of the Ministry of Finance at 158, 160 and 162, there is a possibility that the Ministry of Finance and the Bank of Japan will issue statements to stop the depreciation of the yen. “The next resistance level is likely to be around 156 yen.”

CHRISTOPHER WONG, CURRENCY STRATEGIST, OCBC, SINGAPORE

“This would have been a good window for the Bank of Japan to raise rates given a hawkish Fed, but the Fed’s pause and the Bank of Japan’s reluctance suggest that the dollar/yen may face upward pressure.

“Price-related data and labor market reports continue to support the case for the BOJ raising rates. The fact that the Federal Reserve has become more hawkish should also have given BOJ policymakers something peace of mind by raising rates today.

BEN BENNETT, ASIA-PACIFIC INVESTMENT STRATEGIST, LEGAL AND GENERAL INVESTMENT MANAGEMENT, HONG KONG

“The decision to leave rates unchanged was widely expected by investors, so I don’t expect much of a market reaction. That said, the Fed’s overnight dot plot gave the BOJ the option to raise rates.” “, and there was a vote against in favor of a 25 bp increase, so it looks like rates will rise in early 2025.”

MASAHIRO ICHIKAWA, CHIEF MARKET STRATEGIST, SUMITOMO MITSUI DS ASSET MANAGEMENT, TOKYO

“The decision was in line with market expectations, but futures narrowed losses, signaling relief among investors as the decision came on the heels of the Fed’s unexpectedly hawkish view on the path of rates. of the United States for next year.