The Yen extended its losses following the Bank of Japan’s (BOJ) latest policy meeting, where policymakers opted to keep interest rates unchanged and continue with its yield curve control program. This decision stands in stark contrast to the actions of other major central banks, such as the Federal Reserve and the European Central Bank, which are aggressively raising interest rates to curb rising inflation.

The BOJ’s commitment to its dovish stance is driven by its belief that current inflationary pressures are primarily cost-push and not sustainable. The central bank anticipates that inflation will eventually fall back below its 2% target as global commodity prices stabilize.

Market participants widely anticipated the BOJ’s decision, and the Yen’s weakness reflects the growing interest rate differential between Japan and other developed economies. This differential makes the Yen less attractive to investors, who are seeking higher returns elsewhere.

Analysts predict that the Yen will remain under pressure as long as the BOJ maintains its ultra-loose monetary policy. Some economists suggest that the BOJ may eventually be forced to adjust its policy if the Yen’s depreciation becomes too rapid or if inflation proves to be more persistent than anticipated.

The impact of the weaker Yen on the Japanese economy is mixed. While it can boost exports and corporate profits, it also increases the cost of imports, potentially hurting consumers and businesses that rely on imported goods.

Key Factors Influencing the Yen:

• BOJ Monetary Policy
• Global Interest Rate Differentials
• Inflation Expectations
• Global Economic Outlook

The currency market will continue to closely monitor the BOJ’s actions and statements for any hints of a potential policy shift. Any indication that the BOJ is considering tightening its monetary policy could provide support for the Yen.