Analyst: Japanese Yen Strength and Tariff Uncertainty Could Prompt BOJ to Stand Pat This Week

Vincent Chung, Co-Portfolio Manager for T. Rowe Price's Diversified Income Bond Strategy, stated in a report that given the uncertainty in economic growth, the Bank of Japan is expected to keep interest rates unchanged at this week's meeting. The appreciation of the yen and concerns about the potential impact of tariffs on economic growth may lead the BOJ to delay further rate hikes. The uncertainty around tariffs has increased the risk premium on U.S. assets, and investors must pay attention to potential trade agreements that could reduce this risk premium. He added, "If volatility in the U.S. Treasury market decreases, the yen long positions from safe-haven buying in the market should pressure the yen's appreciation in the short term."