The Federal Reserve recently announced that it has not made any progress towards its 2% inflation target, suggesting that interest rate cuts may be delayed until later in the year. In January, investors were expecting six quarter-of-a-percentage-point cuts in 2024, but have since reduced their expectations.
Following this news, the yen experienced a sharp rebound, leading to speculation that government intervention may have occurred to support the currency for the first time since 2022. The yen had previously reached a 34-year low of 160 to the dollar after the Bank of Japan decided to keep its benchmark interest rate unchanged at between zero and 0.1%. This decision came after a rate increase from minus 0.1% in March. Despite this, the central bank did not provide clear guidance on future rate hikes or any plans to significantly reduce its bond-buying activities.
