BoJ’s 25 Bps Hike Provides Limited Yen Support, Says BBH

According to Brown Brothers Harriman (BBH) analyst Elias Haddad, the Bank of Japan’s 25 basis point rate hike to 1.00% has provided only limited support to the Japanese yen. The reaction in USD/JPY was muted despite the move.

The BOJ maintained its gradual tightening bias and continued its JGB tapering program, but Japanese government bond yields underperformed following the decision. This suggests the market had largely priced in the hike and remains focused on the broad interest rate differential between Japan and the US.

BBH’s assessment highlights that the yen’s weakness persists as the BOJ’s policy normalization remains measured and lagging behind other major central banks.