2025.12.1907:26:57UTC+00Yen Weakens as BOJ Signals Caution

On Friday, the Japanese yen fell beyond 156 per dollar, reaching its lowest point in over a week. This decline came after Bank of Japan Governor Kazuo Ueda opted not to outline a specific course for further interest rate hikes, instead highlighting the importance of staying adaptable to future economic and financial shifts. Ueda also highlighted ongoing uncertainties surrounding the neutral interest rate—essentially, the rate where monetary policy neither promotes nor hinders economic activity. He assured that the Bank of Japan is in continuous dialogue with the government, especially amid concerns regarding Prime Minister Sanae Takaichi’s inclination towards a more accommodating monetary policy. Previously, the central bank had increased its benchmark interest rate by 25 basis points, bringing it to 0.75%. This move, anticipated by many, marked the highest rate since 1995, driven by persistent inflation surpassing the target. Though Japan’s headline inflation slightly eased to 2.9% in November from October’s 3%, it remained above the central bank’s 2% target for the 44th month in a row, with core inflation steady at 3%.