The USD/JPY currency pair held within a tight daily range on Wednesday ahead of the outcome of the Federal Reserve’s policy meeting and after the BoJ’s verdict.
The Fed is largely expected to leave its federal funds rate target range intact at 3.50%-3.75% at its June 16th-17th meeting, following three successive rate cuts last year.
The minutes of the Federal Reserve’s April policy meeting showed that most officials judged additional policy firming would likely be warranted if inflation continued to run persistently above the 2% objective.
Policy makers broadly agreed that inflation risks were tilted to the upside and acknowledged that developments in the Middle East could significantly shift the balance of risks and complicate the appropriate policy path.
Although the US and Iran have agreed to a provisional peace deal, oil prices are still holding above pre-war levels.
Market participants will be scrutinizing the subsequent press conference for indications of how newly installed Fed Chair Kevin Warsh plans to steer the central bank in the period ahead.
They will also be paying close attention to the new set of FOMC economic forecasts.
Meanwhile, the Bank of Japan concluded its two-day monetary policy review by increasing its short-term interest rate by 25 basis points to 1.0% from 0.75%. This adjustment took the benchmark rate to its highest point since 1995. The rate decision was made by a 7-1 vote.
According to the Monetary Policy Statement, BoJ board members intend to continue raising the policy rate in line with changes in economic activity, inflation dynamics, and financial conditions.
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