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Bank of Japan Governor Ueda is answering questions in parliament:

• Uncertainties over rice and other food prices remain high, but prices likely to settle down eventually
• Mindful of impact of rising food prices on underlying inflation
• Will closely monitor price situations as uncertainties over global economy remain high

Earlier:

• BoJ minutes: Bank will raise rates if economic and price projections realised
• Former BOJ Governor Kuroda supports Ueda’s normalization steps

This article was written by Eamonn Sheridan at www.forexlive.com.

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People’s Bank of China USD/CNY reference rate is due around 0115 GMT.

The People’s Bank of China (PBOC), China’s central bank, is responsible for setting the daily midpoint of the yuan (also known as renminbi or RMB). The PBOC follows a managed floating exchange rate system that allows the value of the yuan to fluctuate within a certain range, called a “band,” around a central reference rate, or “midpoint.” It’s currently at +/- 2%.

How the process works:

• Daily midpoint setting: Each morning, the PBOC sets a midpoint for the yuan against a basket of currencies, primarily the US dollar. The central bank takes into account factors such as market supply and demand, economic indicators, and international currency market fluctuations. The midpoint serves as a reference point for that day’s trading.
• The trading band: The PBOC allows the yuan to move within a specified range around the midpoint. The trading band is set at +/- 2%, meaning the yuan could appreciate or depreciate by a maximum of 2% from the midpoint during a single trading day. This range is subject to change by the PBOC based on economic conditions and policy objectives.
• Intervention: If the yuan’s value approaches the limit of the trading band or experiences excessive volatility, the PBOC may intervene in the foreign exchange market by buying or selling the yuan to stabilize its value. This helps maintain a controlled and gradual adjustment of the currency’s value.

This article was written by Eamonn Sheridan at www.forexlive.com.

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Bank of Japan minutes from its March policy meeting – full text

• Members agreed BOJ would continue to raise rates if its economy, price outlooks were to be realised
• One member said it’s appropriate to pay close attention to the new U.S. policies and their impact on the global economy
• One member said BoJ would need to be particularly cautious when considering the timing of next rate hike as downside risks stemming from U.S. policies had rapidly heightened
• One member said, even with heightened uncertainties, it did not warrant BoJ to be always cautious and BOJ may face a situation where it should act decisively
• One member said necessary to make nimble adjustments to the degree of monetary accommodation if it needed to avoid overheating of financial activities
• One member said that during the phase of the next policy interest rate hike, underlying CPI inflation might be fairly close to 2%
• One member said not necessary at this point to make any major changes to bond tapering plan when BOJ reviews its current plan in June
• That member also said BoJ would however need to examine from a longer-term perspective the reduction plan for April 2026 onward
• One member said that given that U.S. Federal Reservesaid it was in no hurry to adjust policy stance, BoJ policy could be more flexible

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I posted this earlier, the minutes not contradicting:

Prior to the meeting minutes the Bank publishes its ‘Summary of Opinions’. For this meeting these can be found here:

• Bank of Japan Summary of Opinions of the March 18 and 19 meeting

At the meeting in March the Bank remained on hold.

The key points from the Summary were:

• BOJ will continue to hike rates if economy, prices move in line with forecast
• The downside risks from the U.S. are heightening sharply and could have negative impacts on Japan’s economy, so we must be even more cautious on deciding next rate-hike timing
• Downside risks to Japan’s economy are, in turn, heightening due to U.S. tariff policy, supply chain disruptions, so must keep policy steady for time being

Those final two are why the Bank is on hold and looks like could be for another few meetings. The meeting that followed on May 1 also saw the Bank leave policy on hold.

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This article was written by Eamonn Sheridan at www.forexlive.com.

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