The surprise rate increase by the Bank of Japan on Wednesday may have been all about the yen, with the central bank laser focused on the weak and wobbly currency and taking on a role it has been reluctant to in the past.
“It is conceivable that the yen’s weakness was literally the main factor that pushed the BOJ to introduce the additional rate hike this time, with the central bank intending to rein in the depreciation,” Takahide Kiuchi, executive economist at Nomura Research Institute, wrote in a report Thursday.
At a two-day policy meeting ending Wednesday, the BOJ voted to increase its short-term policy rate target to 0.25% from a range of 0% to 0.1%.