Japanese Yen Receives Support Following BoJ Meeting Minutes

USD/JPY edges lower after registering gains in the previous day, trading around 158.70 during the Asian hours on Wednesday. The pair weakens as the Japanese Yen (JPY) gains support following the release of the Bank of Japan’s (BoJ) January Meeting Minutes.

A BoJ member noted that while rising interest rates could weigh on consumption, the broader financial system impact would likely remain contained. Policymakers agreed that with real interest rates still deeply negative, further rate hikes would be appropriate if economic and inflation projections are met. Most members also emphasized a flexible approach, favoring decisions at each meeting rather than committing to a fixed pace of tightening.

According to Danske Bank’s research team, recent Japanese data have softened, with the Composite PMI declining and core CPI falling below target for the first time in four years, largely due to fuel subsidies. However, input costs remain elevated, and the Japanese Yen continues to show weakness. The bank expects the BoJ to deliver its next rate hike in April, with markets currently pricing around a 50% probability.

Meanwhile, Brown Brothers Harriman’s Elias Haddad noted that USD/JPY is trading sideways just below 159.00. While both headline and core inflation slowed in February, underlying price pressures remain above the BoJ’s fiscal 2026 projections. Strong outcomes from spring wage negotiations are seen as supportive of renewed policy tightening, reinforcing expectations for a potential rate hike at the BoJ’s April 28 meeting.