The market remains cautious about the Bank of Japan's hawkish signals, and the central bank governor's subsequent statements will determine the direction of the yen.

BlockBeats News, January 23 — Due to concerns over fiscal policy, inflation, and geopolitical tensions, as well as ongoing market volatility, the Bank of Japan chose to keep interest rates unchanged ahead of next month’s general election. The Bank of Japan maintained the short-term interest rate at 0.75% with an 8 to 1 voting result, with only deliberation member Takada Sho believing that the price stability target has been largely achieved and proposing to raise the short-term interest rate target from 0.75% to 1.0%.

The market is now cautious of any hawkish signals from the central bank. Previously, Prime Minister Sano promised to reduce the consumption tax, which triggered turbulence in the Japanese government bond market and dragged down the yen. Some analysts warn that if Bank of Japan Governor Ueda Kazuo does not explicitly signal further rate hikes, especially given the BOJ’s desire to avoid political backlash ahead of the early election on February 8, the yen could face a new round of pressure. (Jin10)