Japanese Yen falls as Fed’s decision to hold reveals hawkish split

• Following the Fed’s rate decision, USD/JPY rises 0.21% to 158.28.
• Rates remain at 3.75%-4% as the Fed stands pat, although two officials favour tightening.
• With inflation proving persistent and US economic activity resilient, further rate rises remain a possibility.

US inflation remains well above the Federal Reserve’s 2% target, but the central bank left interest rates unchanged, after which the Japanese Yen weakened against the US Dollar. Two officials dissented, preferring a quarter-percentage-point rate rise, so the decision was not unanimous. USD/JPY is trading 0.21% higher at 158.28.

USD/JPY Advances Towards 158.50 as persistent inflation prompts two Fed officials to oppose unchanged rates

Interest rates were left at 3.75%-4% by the Fed on Wednesday. The central bank recognised that economic activity is growing and that domestic spending “has been resilient, that productivity growth is strong and that capital investment is robust,” while also highlighting strong productivity growth. Turning to its employment mandate, it stated: “Job gains have kept pace with the workforce, and the unemployment rate has changed little.”

Although inflation remains elevated, according to the central bank, it opted to defer rate rises as it collects further information and evaluates the appropriate policy stance.

Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack cast the two dissenting votes on the FOMC.

USD/JPY Daily Price Chart