USD/JPY: Bank of Japan keeps rates on hold - ING

The Japanese Yen (JPY) move is fairly muted, rising against the dollar to 144.46 (vs 145 previously) then staying range-bound, and JGB futures dropped around 0.1% after the Bank of Japan's decision to keep its policy rate at 0.5% and to slow the JGB tapering from April 2026, ING's FX analyst Francesco Pesole notes.

Yen seems muted on hawkish signals

"Both decisions are in line with the market consensus. The BoJ will reduce JGB purchases by 200bn per quarter starting from April 2026. But there was one dissenting voter, and there will be a meeting between the MoF and PDs later this week, which may create more volatility. So, this might have given some cautiousness to the JGB market."

"The BoJ's JGB hold on the short end is relatively smaller than the long end, thus quantitative tightening has a much bigger impact on market rates. Slowing QT doesn't necessarily signal a slowdown of rate hikes by the BoJ. To sum up, the BoJ's decision was in line with the market consensus, and the market's initial reaction seems a bit limited."