The Bank of Japan may issue its highest interest rate decision in over 30 years, with the deputy governor taking over, sparking concerns over sharp fluctuations in the yen.

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ME News Report, June 12 (UTC+8), the Bank of Japan will hold a key monetary policy meeting next Tuesday. The market widely expects a 25 basis point rate hike to 1%, reaching the highest level since 1995, marking Japan's monetary policy further toward normalization. However, uncertainty surrounding this meeting has significantly increased. Governor Ueda Kazuo has been hospitalized due to health reasons and will be absent from the meeting and the post-meeting press conference. Deputy Governor Uchida Shinichi will take over communication responsibilities, drawing high market attention to potential changes in policy wording and forward guidance. Currently, the USD/JPY has risen above 160, approaching a two-year high and nearing the intervention zone. Traders generally believe that, given the market has fully priced in the rate hike expectations, the real key lies in the central bank’s stance on the future rate hike path. Institutional analysts point out that if the Bank of Japan signals a dovish stance, it could further weaken the yen and push up Japanese government bond yields; conversely, if it shows a clearer tightening inclination, it would help stabilize exchange rate expectations. Meanwhile, Japan faces multiple constraints, including rising imported inflation pressures, energy price volatility, and fiscal expansion expectations, making policy paths more complex. The latest data shows Japan’s core inflation has risen to 3.5%, reaching a new high for the period. Analysts believe that this meeting is not only a rate adjustment milestone but also a crucial window to observe changes in the Bank of Japan’s policy communication framework. Deputy Governor’s statements will directly influence the short-term direction of the yen and global interest rate markets. (Source: ChainCatcher)
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