FX.co ★ Yen Rises on Hawkish BOJ Signals

The Japanese yen advanced beyond 156 per dollar on Monday, rebounding from losses in the previous session, as investors contemplated the timing of future rate hikes and the potential for intervention amidst thin year-end trading. Focus remained on the Bank of Japan's policy stance following its December meeting, where the summary revealed that policymakers debated further tightening even after the rate hike to a multi-decade high last month. Several members contended that the policy remains far from neutral in real terms, advocating for gradual rate increases to preempt inflationary threats. Meanwhile, others cautioned that maintaining low rates has contributed to yen depreciation and heightened long-term yields, suggesting that timely rate increases could help stabilize inflation expectations and bond markets, thus solidifying the outlook for a cautious but steady path towards normalization. Markets are also attentive to indications of intervention by authorities after Finance Minister Katayama underscored Japan's autonomy to respond to excessive yen movements.