Institution: The Bank of Japan keeps interest rates unchanged, both to defend the yen and to control inflation.

Masahiko Loo, of Dowa Investment Management, stated that the Bank of Japan's decision to maintain interest rates could be seen as a move to defend the yen and control inflation. Of the nine committee members, three dissented and were in favor of a rate hike. The senior fixed income strategist said that the decision to keep rates unchanged, despite domestic resilience in inflation and growth, indicates that the Bank of Japan's tolerance for further weakening of the yen is decreasing. Loo stated in an email that the strengthened inflation forecasts post-rate hike align with Dowa's core belief that Japan is entering a prime period of development driven by robot technology, the next wave of AI-led productivity, and fiscal expansion. Loo suggested that the Bank of Japan may hike rates in the critical window of June to July, and he predicts that the US dollar will strengthen against the yen, but may see resistance near the "bottom" of 162 yen.