The Bank of Japan's (BOJ) two-day policy meeting, wherein it maintained its accommodative monetary policy stance, the yen fell amid volatile trade on Friday.
On Friday, the BOJ kept its short-term rates unchanged. The spotlight is on BOJ's policy outlook, watch out for BOJ Governor Kazuo Ueda's conference later on Friday.
Fears of a Tokyo intervention to support the yen also persisted, considering the yen's multi-decade lows versus the recovering dollar.
To little effect, Japanese Finance Minister Shunichi Suzuki added on Friday that country is worried about the negative effects of the weakening yen, following a series of aggressive threats from authorities in recent weeks.
There's a chance that increases in the cost of imported goods could cause the weakening yen to accelerate trend inflation. Ueda stated last week in Washington that "if the impact becomes too big to ignore, it might lead to a change in monetary policy," a sentiment he may reiterate at his press conference following the meeting.
It is anticipated that the BOJ will stick to its short-term interest rate target, which was established just one month ago when it made history by ending its enormous stimulus program. The target is expected to be between 0 and 0.1 percent.
The board is anticipated to predict that inflation, as determined by an index that does not include the price of fuel and fresh food, will remain close to its 2 percent target through early 2027 in a quarterly outlook report that is due following the meeting, sources have told Reuters.
However, data released on Friday revealed that in April, Tokyo core inflation—a leading indicator of national statistics—slowed much more than anticipated and fell below the BOJ's 2 percent target, highlighting concerns about the outlook for prices.
At its meeting on Friday, the BOJ will negotiate ways to cut back on its bond purchases, like assessing the 5-7 trillion yen monthly purchase range it set.
