Bank of Japan Keeps Interest Rate at 0.25%

The Japanese yen strengthened against major currencies following the Bank of Japan's (BoJ) decision to maintain its key interest rate at 0.25%, citing inflation risks and a cautious outlook amid political instability in Japan and uncertainties surrounding the upcoming U.S. presidential election. BoJ Governor Kazuo Ueda emphasized the need to adjust monetary policy based on economic conditions, hinting at potential future rate hikes. Despite the yen's gains, concerns remain about the impact of geopolitical tensions and the U.S. economic landscape on currency stability. Retail sales data showed a year-over-year increase of only 0.5%, below expectations, while industrial production rose by 1.4%, indicating mixed economic signals. Market participants are closely watching U.S. economic indicators, including the Personal Consumption Expenditures Price Index, for further direction. The yen's recent performance follows a period of weakness exacerbated by Japan's ruling coalition losing its long-held majority in a recent election, prompting government vigilance over currency fluctuations.