AUD/JPY holds position above 95.00 as BoJ maintains policy, traders eye Fed decision

• AUD/JPY holds steady following the Bank of Japan’s interest rate decision.
• The BoJ maintained its short-term interest rate target within the 0.40%-0.50% range in March.
• The Australian Dollar remains stable as traders exercise caution ahead of the Fed’s interest rate decision due on Wednesday.

AUD/JPY remains firm near 95.10 during Asian trading hours on Wednesday, following the Bank of Japan’s (BoJ) interest rate decision. As widely expected, the BoJ kept its short-term interest rate target within the 0.40%-0.50% range after concluding its two-day monetary policy review.

The BoJ’s BoJ Monetary Policy Statement noted that Japan's economy is recovering moderately, though some weak signs persist. Consumption is increasing gradually, and inflation expectations are rising at a measured pace. However, risks remain, particularly regarding global trade policies and their impact on overseas economies and prices.

BoJ Governor Kazuo Ueda reiterated the central bank’s readiness to raise interest rates further if inflation moves sustainably toward its 2% target. Speaking in parliament on March 12, Ueda emphasized that long-term interest rates are influenced by market expectations for the BoJ’s short-term policy stance, reinforcing the possibility of hikes later in the year.

Meanwhile, the Australian Dollar (AUD) remains steady as traders adopt a cautious stance ahead of the Federal Reserve’s (Fed) interest rate decision later in the day. Markets expect the Fed to hold rates steady amid persistent inflation concerns and economic uncertainty.

On the domestic front, Australia's Westpac-Melbourne Institute Leading Index rose by 0.1% month-over-month in February 2025, maintaining the same pace as the previous month. The six-month annualized growth rate in the index, which provides insight into the economy’s future trajectory, climbed to 0.8% from 0.6%. This reflects continued domestic resilience despite waning support from currency and commodity markets.