The Bank of Japan held its policy interest rates steady on July 31, but Governor Kazuo Ueda’s hawkish tone pushed the Japanese currency below 159 yen per US dollar. Ueda said the impact of currency volatility on inflation may be becoming bigger than in the past, signaling that risks now lean toward overshooting the 2% target. Board member Hajime Takata dissented from the decision, calling for an immediate rate hike to 1.25%, reflecting significant internal pressure for more aggressive tightening. The last BOJ hawkish surprise in late July 2024 triggered a brief but violent selloff across global markets, including a sharp drop in Bitcoin and other cryptocurrencies.
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