- The Bank of Japan overnight raised its key interest rate for the first time since 2007, ending the world’s last negative interest rate regime. The central bank set a new policy rate of between 0% and 0.1%, scrapping its negative 0.1% rate and ended its yield curve control program. The BoJ has been an outlier against its global peers and continues to be, making its first upward interest rate move in 17 years just as other central banks around the world consider cutting policy rates after aggressively tightening to stem a flurry of global inflation. The Japanese yen lost ground against the greenback with USDJPY moving through 150.
- Elsewhere, EURUSD and GBPUSD were subdued yesterday, with traders in ‘wait and see’ mode ahead of a series of key data releases and central bank meetings. EURUSD hovers below 1.09 as we await the release of the German ZEW survey this morning. GBPUSD slipped a touch overnight but continues to trade on a 1.27 handle as we look forward to tomorrow’s key UK CPI print, the FOMC meeting and Thursday’s BoE decision.
- The Reserve Bank of Australia held its key policy rate at a 12-year high overnight, leaving the cash rate unchanged for a third straight meeting. In contrast to previous meetings the RBA board made no reference to the possibility of further rate increases, suggesting that its tightening cycle may have ended and the next move in rates could be down.
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