GBP/JPY trades below 8-year high as BoJ keeps policy intact

The Japanese Yen retreated to levels close to a more than 8-year low against the Sterling on Tuesday, after the Bank of Japan maintained its ultra-accommodative monetary policy at its January meeting.

Later, the Yen pared initial losses.

The BoJ left its benchmark short-term interest rate without change at -0.10% and also kept a 0% cap on 10-year bond yields set under its yield curve control policy.

The BoJ also kept a 1% upper band for the long-term government bond yield.

Meanwhile, in its quarterly outlook report, the central bank revised down its core CPI inflation forecast for the fiscal year that begins in April to 2.4% from 2.8%, as forecast in October.

For fiscal year 2025, the BoJ said it expected core inflation to reach 1.8%, an upward revision from an earlier forecast of 1.7%.

BoJ Governor Kazuo Ueda had said he saw no immediate need to move away from the bank’s dovish stance.

“Most analysts now predict the BOJ will exit its negative interest rate policy at the April meeting after the Shunto wage negotiation result becomes available,” Joy Yang, head of Asian economic research at Point72, was quoted as saying by Reuters.

“While we still see April as the most likely window, the risk that the BOJ will do the first hike later than April has been rising.”

As of 7:43 GMT on Tuesday GBP/JPY was inching down 0.02% to trade at 188.108. The minor Forex pair went up as high as 188.909 immediately after the BoJ’s decision. That was not far from last week’s high of 188.928 – the pair’s strongest level since August 25th 2015.