As of October 13, 2024, the Japanese yen is drawing significant attention from forex traders due to the upcoming monetary policy decision by the Bank of Japan (BoJ) later this month. The potential for increased volatility in the yen comes as markets speculate on whether the BoJ will maintain its ultra-loose monetary policy or take a more hawkish approach to combat inflation.
Current Monetary Policy
The BoJ has maintained an extremely accommodative monetary policy for years, keeping interest rates in negative territory and continuing its yield curve control (YCC) program. These measures are aimed at stimulating economic growth and achieving the bank’s 2% inflation target. However, with inflation in Japan showing signs of rising, pressure is mounting on the BoJ to adjust its stance, particularly in light of tightening policies from other major central banks like the U.S. Federal Reserve and the European Central Bank.
The yen has been under significant pressure throughout 2024, depreciating against major currencies like the U.S. dollar, due to this ongoing policy divergence.
