The yen edged higher as market expectations for a Bank of Japan rate hike have been fully priced in.

(1) Analysts at Mitsubishi UFJ Bank stated that after the Bank of Japan signaled the possibility of further interest rate hikes, the yen only rose slightly. The main reason is that the tightening policy was already fully priced in by the market in advance. (2) The Bank of Japan kept the current interest rates unchanged as expected, while warning of upward inflation risks. Governor Kazuo Ueda said that the necessity of raising interest rates would be continually assessed at every monetary policy meeting. (3) The bank predicts that the Bank of Japan will start a new round of quarterly rate hikes in December, and by the end of 2027, the total rate hikes priced in by the market will reach 77 basis points. (4) The USD/JPY fell by 0.42% in the short term, retreating to around 157.08. (5) Expectations of rate hikes have already been reflected in the exchange rate market in advance, making it difficult for the yen to see a significant rise solely based on hawkish verbal signals from the central bank.