BOJ HAS DECIDED: Maintained Fees, but the "Arm" Still Loaded – Voting Analysis 8-1

[Igor Pereira]

Traders, the market held its breath waiting for an aggressive movement (the 100bps rumor), but the Bank of Japan (BOJ) opted for tactical caution today.

The Official Decision: The BOJ maintained the interest rate unchanged. The Critical Detail: The vote was not unanimous. The score was 8 to 1 , with the board member Takata voting for an immediate increase of 25 basis points (bps) .

By Igor Pereira Financial Market Analyst

That's not a Dovish Hold. It's a strategic pause as they sharpen the knife to combat exchange rate inflation. Below is the translation of the Japanese "Fed Speak" into the reality of your trade.

The BOJ communiqué brought a crucial language change.

• Change: They explicitly admitted that "exchange fluctuations (weak yen) are now more likely to affect prices than in the past" .

• Reading: BOJ is telling the market: "We're watching USD/JPY." If the Yen devalues too much and imports inflation, they will raise interest to defend the currency, not just to control the economy. The exchange is now a direct input in the interest decision.

Takata's lonely vote for an increase of 25bps is the canary in the mine.

• Meaning: It shows that the internal debate to normalize policy (up interest) is heated. Generally, a dissent precedes a policy change at the next meeting.

• Projection: Standardization wasn't canceled, just postponed. BOJ reiterated that "if the economy and prices evolve as expected, we will continue to increase rates" .

The outlook report (Outlook Report) brought high-profile reviews, which justifies higher interest in the future.

• GDP (Growth): Reviewed up.

  • 2025: From 0.7% to 0.9% .

  • 2026: From 0.7% to 1.0% .

• Inflation (Core CPI): Keeped high in 2.7% to 2025.

• Wages: The BOJ sees a "virtuous mechanism" where the shortage of labor forces wage increases, which sustain consumption. This solidifies the floor for 2% inflation.

BOJ's worried about the outside scenario.

• Rates: They explicitly cited the impact of "commercial policies" (read: Trump tariffs) on global manufacturing.

• USA: The risk of deterioration of corporate profits in the US affecting employment is a monitoring factor.

The 100bps Black Swan didn't fly today, but the BOJ prepared the ground for consistent highs.

My Vision: The FX market can see a temporary relief in the Yen (USD/JPY rising slightly) because the immediate discharge did not come.

1. Trade: Beware of aggressive purchases in USD/JPY. The rhetoric about exchange rate affecting inflation is a verbal warning of intervention.

2. Trend: The high interest cycle in Japan is alive. Any rally in USD/JPY will be limited by the fear that Takata's vote will become the majority at the next meeting.

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Game Turned: The Next Yen Movement

With today's decision, implied volatility has changed. Our systems have detected the new area of "verbal intervention" where the Japanese Ministry of Finance will act if the dollar rises too much.

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