The Japanese yen firmed to around 155.9 per dollar on Friday but remained on course for a second straight weekly loss, reflecting continued uncertainty over Bank of Japan (BOJ) policy. Earlier in the week, the government nominated two reflationist academics to the BOJ’s policy board, while Prime Minister Sanae Takaichi was reported to have voiced concerns about additional rate hikes in a meeting with BOJ Governor Kazuo Ueda last week.
At the same time, hawkish board member Hajime Takata called for further interest rate increases and for guidance that the BOJ’s price stability target is close to being met. Governor Ueda has also reportedly said the central bank will closely examine incoming economic data at its March and April meetings before deciding on rates, keeping the option of a near-term hike open.
On the data front, Tokyo’s inflation eased to its lowest level in more than a year, as government utility subsidies reduced household energy bills. The softer inflation figures reinforced expectations that the BOJ may delay immediate additional rate increases.
