Hawkish BOJ April Minutes: June Rate Hike Expectations Rise, USD/JPY May Fall Below 150
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Bank of Japan minutes from the April meeting reveal a hawkish shift, with members indicating potential rate hikes soon, possibly as early as June, to combat inflation driven by oil price shocks. Core CPI is projected to reach 2% between late 2026 and 2027. Nearly two-thirds of economists anticipate a June rate hike to 1.0%. For USD/JPY, the focus is on the pace of tightening. While the yen is supported by the BoJ's stance, FX intervention's short-term impact is noted, with the interest rate differential remaining key. Technically, USD/JPY faces bearish momentum, with resistance at 158.00 and potential downside targets at 152.10 and 147.46-149.43.
TradingKey - On Tuesday (May 12), the Bank of Japan released the minutes of its April monetary policy meeting, which showed that several policy members believe the central bank may need to raise interest rates soon, with some even mentioning that the bank could act as early as the June meeting.
Against the backdrop of the Bank of Japan maintaining its short-term policy interest rate at 0.75% while three members voted to raise it to 1.0%, these minutes have focused market attention on the June meeting.
Expectations for a Bank of Japan rate hike in June rise significantly.
Based on the minutes, the Bank of Japan's stance is significantly more hawkish than the previous meeting. Official documents show that the Policy Board is generally concerned that oil price shocks from the Middle East could drive up import costs and intensify inflationary pressures on businesses and households, with core CPI expected to return to the 2% target between the second half of 2026 and 2027. Furthermore, some members believe the central bank should accelerate the pace of rate hikes if upside risks to prices continue to rise.
Notably, the minutes even included phrases such as "raising interest rates for several consecutive months" and "approaching the neutral rate sooner if oil price disruptions are prolonged," indicating that the Bank of Japan's internal vigilance over inflation now outweighs concerns about slowing economic growth.
According to a Reuters poll, nearly two-thirds of surveyed economists expect the Bank of Japan to raise interest rates further to 1.0% by the end of June. Meanwhile, Mizuho Securities also views a rate hike at the June 15–16 meeting as the most likely outcome.
For the yen exchange rate, the focus has shifted from whether the Bank of Japan will raise rates to whether the pace of tightening will accelerate. Following the release of today's minutes, the USD/JPY ( USDJPY) maintained its upward momentum, hitting an intraday high of 157.74. This suggests that while the yen is supported by the BoJ's hawkish turn, it has not established a trend reversal.
From recent exchange rate movements, although the Bank of Japan intervened in the FX market in late April—causing USD/JPY to plunge from 160.72 to near 155—the pair subsequently rebounded to around 157.00 and is currently oscillating near 157.20. This demonstrates that central bank interventions only impact short-term market movements; the medium-term direction of the exchange rate is still determined by the US-Japan interest rate differential and the Bank of Japan's interest rate policy.
Overall market sentiment for USD/JPY remains bearish, with the pair potentially poised to break below 150.00.
USD/JPY daily chart, Source: TradingView
From a technical perspective, overall market sentiment for USD/JPY is skewed toward the bears amid threats of intervention by the Bank of Japan. Furthermore, as the exchange rate has recently continued to trend below the 144-day moving average, and the May 6 closing price finished below it, bearish momentum for USD/JPY has been significantly bolstered.
At the same time, the 10-day moving average has crossed below the 60-day moving average, forming a death cross structure that further reinforces bearish market momentum.
Currently, the 158.00 handle is a key resistance level to watch for USD/JPY. A strong breakout and consolidation above this level would be required to further open up upside potential, potentially testing the 160.00 mark.
On the downside, if USD/JPY remains under pressure below 158.00, the exchange rate may test the 152.10 support level. Should this level be breached, the price could further decline to fill the October 2025 gap of 147.46-149.43.
This content was translated using AI and reviewed for clarity. It is for informational purposes only.
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