Fed Holds Rates Steady in July as US-Japan Intervention Supports Yen Amid Inflation Concerns

The Federal Reserve kept interest rates unchanged in July, despite dissent from three officials who favored a 25 basis point hike. Deutsche Bank noted the likelihood of two further 25bp increases this year, while HSBC highlighted that markets assign about a two-thirds probability to a September rate increase. Fed President John Williams expressed confidence that inflation will return to the central bank’s 2% target.

Meanwhile, joint intervention by the United States and Japan helped strengthen the Japanese Yen amid recent market volatility. According to MUFG, this support involved the Fed’s FIMA Repo Facility, US euro-to-yen reallocations, and Japan’s foreign exchange reserves, reinforcing the Yen’s position against the US Dollar.

In the broader market, 10x Research suggested Bitcoin could confirm a bear market bottom in August, but warned that rising Treasury yields might compel the Fed to hike rates in September. For Japanese investors, these developments highlight the ongoing interplay between US monetary policy and currency dynamics impacting FX and equity markets.