The Bank of Japan (BOJ) released the minutes of the monetary policy meeting held on October 30-31 on December 24. The minutes show that policymakers unanimously agreed that if the economic and price trends meet expectations, they will continue to raise interest rates. However, due to uncertainties in the outlook, especially the risks from overseas economies such as the United States, and the still unstable financial markets, the Bank of Japan's attitude has become cautious, leading to further weakness of the yen.

At the October meeting, the Bank of Japan maintained the policy interest rate at 0.25% and predicted that inflation would be close to the target level of 2% in the coming years. This suggests that the central bank may raise borrowing costs in the near future. However, given the heightened uncertainties both domestically and internationally, the Bank of Japan ultimately chose to postpone interest rate hikes at the end of October.

In addition, at the latest meeting on December 19, the Bank of Japan decided to maintain interest rates unchanged with a vote of 8 to 1, with board member Naoki Tamura voting against it. This decision reflects the policymakers' desire to take more time to examine whether wage growth will stabilize the inflation rate around the 2% target. Bank of Japan Governor Kazuo Ueda stated at the post-meeting press conference that the central bank needs to closely monitor the future trends of overseas economies and the development of monetary capital markets to assess their impact on the economic and price outlook.

Analysts point out that the Bank of Japan may decide whether to adjust monetary policy after observing wage growth in 2025 and the policy direction of the new U.S. government. Therefore, in the short term, the Bank of Japan may continue to maintain the current interest rate level until clearer economic signals emerge.

The cautious attitude of the Bank of Japan has been reflected in the market, causing the yen to decline again. Since December, the yen has depreciated by about 4.8% against the U.S. dollar.

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