BoJ Raises Rates by 25bps, Yen Weakens Against Euro and Pound on Hawkish Tone

The Bank of Japan implemented a 25 basis point rate hike, raising the policy rate to 1.25% in a split decision marked by notable dissent, according to FX Street. BoJ Governor Ueda’s hawkish comments following the move contributed to a selloff in the Japanese Yen, with the Euro approaching 181.00 yen, near a two-week high.

Similarly, the British Pound surged against the Yen, pushing GBP/JPY above 210.50, reaching a nearly two-week top amid the post-BoJ market reaction. USD/JPY also climbed comfortably above the mid-156.00s level, holding a two-week high after the central bank’s announcement and Ueda’s remarks.

Despite acknowledging persistent inflation risks, the BoJ’s rate hike has left the Yen vulnerable, noted ING’s Frantisek Taborsky. This shift marks a significant development for Japanese markets as the central bank takes a more hawkish stance while global currencies adjust to the new policy environment.