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28/04/26
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EUR/JPY Falls as BoJ Holds Rates and ECB Decision Looms
EUR/JPY continued to trade with a soft tone on Tuesday, extending its losses after two straight sessions of gains and hovering near 186. The pair came under pressure following the Bank of Japan’s latest policy decision, which offered little immediate support to the yen but kept expectations alive for a more hawkish debate within the central bank.
The Bank of Japan left its short-term interest rate unchanged at 0.75%, matching market expectations after a two-day meeting. The vote was 6–3, with board members Nakagawa, Takata, and Naoki Tamura dissenting in favor of a rate increase to 1.0%. The split underscored growing concern inside the central bank about persistent inflation risks, even as policymakers chose not to act for now.
Comments from dissenting members suggested that price pressures may remain elevated. One policymaker pointed to uncertainty in the Middle East but said upside risks to inflation were increasing under accommodative financial conditions. Another argued that the price stability target had largely been achieved and that imported inflation could continue to feed into domestic prices through second-round effects.
Attention now turns to the European Central Bank, which is widely expected to keep its deposit rate unchanged at 2.0% on Thursday. That rate has been steady since June last year, and policymakers are likely to remain cautious as they assess the impact of geopolitical tensions and broader economic uncertainty.
The ECB is expected to maintain a data-dependent stance, avoiding any policy shift while conditions remain unsettled. Last week, Governing Council member Martins Kazaks said the central bank still had the advantage of gathering information before forming a clearer assessment. That approach suggests the euro may struggle to gain strong direction until the ECB provides more explicit guidance later in the week.
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