The Japanese yen weakened in Asian trading on Thursday against a basket of major and minor currencies, extending its losses for the second consecutive session against the US dollar following the Bank of Japans decision to keep interest rates unchanged for the sixth straight meeting.

Despite holding rates steady, the central bank reiterated its readiness to raise rates in the future if economic indicators evolve in line with its projections. Investors are now awaiting the press conference by BOJ Governor Kazuo Ueda for further clues on the likelihood of a rate hike in December.

Price Overview

USD/JPY rose about 0.3% to 153.16 yen, up from the days opening at 152.72 yen, after hitting a low of 152.16 yen.

The yen closed Wednesday down 0.7% against the dollar, resuming losses after a one-day pause its first in eight sessions pressured by the outcome of the Federal Reserve meeting.

Bank of Japan

As widely expected, the Bank of Japan decided Thursday to make no changes to its current monetary policy tools, maintaining the benchmark rate at 0.50% the highest since 2008 for the sixth consecutive meeting.

The decision was backed by seven of the banks nine board members, while two voted in favor of raising rates to 0.75%, as they did in the previous meeting. This division highlights growing internal pressure to begin normalizing monetary policy.

The BOJ said it remains prepared to gradually raise borrowing costs if economic and financial indicators improve as anticipated.

In its quarterly report, the central bank upgraded its growth outlook for the current fiscal year and raised its inflation forecast for fiscal 2026, expecting core inflation to exceed 2% in the second half of its projection period through March 2027.

Interest Rate Outlook

Following the meeting, market pricing for a possible 25-basis-point rate hike by the BOJ in December held steady around 50%.

Investors are watching upcoming data on inflation, unemployment, and wage growth in Japan for further direction.

Kazuo Uedas Remarks

Governor Kazuo Ueda is scheduled to speak later today on the outcome of the policy meeting, with markets expecting his comments to offer stronger signals regarding the timeline for policy normalization and rate hikes this year.

Analyst Commentary

Carol Kong, currency strategist at Commonwealth Bank of Australia, said before the BOJ decision: We know the Bank of Japan tends to be highly sensitive to broader economic policy shifts.

She added: Given the recent election of Prime Minister Sanae Takaichis administration and its plans for a new economic package, I believe the BOJ will remain cautious in the very near term.