The Japanese yen has been stable in recent days, with USD/JPY trading at 156.85, down 0.09% on Monday. The Bank of Japan is taking a cautious approach to raising interest rates amidst global economic uncertainty. While other central banks are cutting rates to combat falling inflation, the BoJ is looking to tighten policy after years of deflation.
Although the BoJ faces challenges in raising inflation, Governor Ueda noted progress in moving away from zero interest rates and boosting inflation expectations. The recent core CPI figures for April showed a slight slowdown, but the BoJ remains committed to its goal of achieving sustainable inflation.
In March, the BoJ raised rates out of negative territory for the first time in eight years. However, interest rates remain low, and the yen is being kept at subdued levels due to the US/Japan rate differential. The BoJ is expected to proceed cautiously, with the next rate hike likely to be a modest 0.1% increase.
On the technical side, USD/JPY faces resistance at 157.69 and 158.37, with support levels at 156.59 and 155.91.
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