The Federal Reserve recently announced that there has been a “lack of further progress” in achieving its 2% inflation target, indicating that interest rate cuts may be delayed until later in the year. In January, investors were expecting around six quarter-of-a-percentage-point cuts in 2024, but have since decreased their expectations.
Following the announcement, 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. The central bank did not provide clear guidance on future rate hikes, nor did it outline any plans to significantly reduce its bond-buying activities.