State Street: Bank of Japan's dovish rate hike suggests Kazuo Ueda may maintain a neutral stance.

Masahiko Loo, Senior Fixed Income Strategist at State Street Investment Management: The market may interpret the Bank of Japan's rate hike as dovish, leading to short-term volatility in the yen. However, supported by the Federal Reserve's accommodative policy and Japanese investors increasing their hedging ratios from historic lows, the longer-term target of 135-140 remains unchanged. The focus now shifts to the tone of Bank of Japan Governor Kazuo Ueda's press conference and forward guidance—likely neutral, suggesting a gradual normalization in 2026-27, neither overly dovish nor hawkish. Ueda needs to maintain a delicate balance. (Jinshi)