TOKYO, – Japanese stocks rose on Thursday while the yen shed early gains after the Bank of Japan flagged continuing risks to the economic outlook in keeping interest rates steady.
In its quarterly outlook report, the BOJ said that although trade talks had seen progress, uncertainty surrounding each country’s negotiations and the economic and inflationary impact remain high.
The Nikkei share average ended the day up 1% at 41,069.82, while the broader Topix added 0.8%.
The yen was trading flat at 149.51 per dollar as of 0753 GMT, erasing earlier gains of as much as 0.6%. Japan’s currency lost ground during BOJ Governor Kazuo Ueda’s press conference, as he said that underlying inflation was still below the central bank’s 2% target, and that monetary tightening effectively works on demand-driven inflation rather than the supply-driven inflation Japan currently faces.
Japanese 10-year government bond futures also ticked higher in extended trading as Ueda spoke.
“The BOJ continues to be cautious on global risks, especially the tariff policy from the United States,” said Tohru Sasaki, chief strategist at Fukuoka Financial Group.
“And actually, between Japan and the U.S., their understanding of the tariff agreement is totally different, so there’s still uncertainty.”
Ahead of the policy decision, traders had firmed up bets for the BOJ to resume raising rates from as early as October after Tokyo reached a long-awaited trade agreement with Washington earlier this month, removing a degree of uncertainty from the economic outlook.
The yen initially strengthened and JGB futures declined after the BOJ’s policy announcement and concurrent release of the outlook report, after the central bank revised up its inflation forecasts.
Cash JGB yields also initially moved higher, but were flat to lower as investors digested the central bank’s cautious message.
The two-year yield, which is most sensitive to monetary policy expectations, was flat at 0.82%, after earlier rising to 0.835%.
The 10-year yield slipped 0.5 basis point to 1.085%, reversing an earlier rise to 1.565%.
This article was generated from an automated news agency feed without modifications to text.
