Early on Friday, around 03:00 GMT, the Bank of Japan (BoJ) will announce the decisions adopted at the regular monetary policy meeting, after two days of exchanging ideas. Following the rate decision, BoJ Governor Kazuo Ueda will hold a press conference around 06:00 GMT to convey the rationale behind the latest monetary policy measures.
In general, The Japanese central bank is expected to keep the short-term interest rate target at -0.1%while leading the 10-year Japanese Government Bond (JGB) yield with a bank spread of +/-0.50%.
Given the latest rise in inflation signs in Japan and the hawkish tone of major central banks, today’s BoJ policy meeting announcements loom large as market players are betting heavily on an end to ultrasoft measures during 2023.
Although the BoJ is not expected to offer any changes to its monetary policy, traders will be watching the details of the Yield Curve Control (YCC) policy and Governor Ueda’s speech as the Japanese central bank appears to be the last stone unturned when it comes to the change in monetary policy.
Before the event, Matias SalordFXStreet analyst said,
Any sign that the Bank of Japan is abandoning its ultra-easy monetary policy will be positive for the Yen; in fact, it would be very positive and could mark the start of a medium-term recovery for the JPY. USD/JPY hit a seven-month high on Thursday near 141.50, the day after the FOMC meeting and the ECB decision. Later, the pair pulled back to the range that has been prevailing since the beginning of the month.
How could it affect USD/JPY?
At time of writing, the USD/JPY pair has pulled back from its yearly high to 139.90 as it prepares for the Bank of Japan’s monetary policy decision. In doing so, the yen pays little attention to the recent rise in yields, while applauding the lack of rebound in the US dollar.
Japanese policymakers have already shaken off expectations of a major move to alter ultra-easy monetary policy by suggesting there is no need for a change in monetary policy. However, the recent announcements of US bond issuance due to the debt ceiling deal are talk of supporting the official push for rate hikes by the end of 2023. It should be noted, however, that it will be crucial to watch the game. of the BoJ’s yield curve control (YCC) during today’s monetary policy releases.
Should Ueda manage to pave the way for future rate hikes, either by disrupting the YCC band or ultimately removing the YCC, USD/JPY could extend its latest U-turn to the lower line of a 3.5 month rising wedge, around 137.70 maximum.
On the other hand, the lack of movement and support from policy makers could attract buyers of USD/JPY. However, the rally will depend on US consumer-focused data for clear directions.
About the BoJ interest rate decision
The BoJ interest rate is announced by the Bank of Japan. Typically, if the BoJ is bullish on the inflationary outlook for the economy and raises interest rates, it is bullish on the Yen. Similarly, if the BoJ takes a dovish view of the Japanese economy and keeps the interest rate on course, or cuts the interest rate it is negative, or bearish.
Source: Fx Street

I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.