We asked Teppei Ino, Chief Analyst at Mitsubishi UFJ Bank, about the Federal Reserve Board's decision.

Q How did you take this decision?

The rate hike was 0.75%, which was within expectations.



In general, there are both hawkish (tightening) and dovish (relaxation) aspects, and there was no major inclination to either.



We believe that the results were largely as the market expected.

Q How did you see the market reaction?

First, the statement issued referred to a slowdown in the pace of rate hikes.



This was a dovish (relaxation) faction, and was intended to encourage interest rates to fall and the yen to depreciate against the dollar.



When the statement was announced, the dollar depreciated and the yen appreciated to the 145 yen level to the dollar.



On the other hand, at Chairman Powell's subsequent press conference, he made remarks that seemed to discourage the reaction of the market, which was expecting such dovish content. moved to



Next December's FOMC (Monetary Policy Meeting) will be a very high-profile event, but the Fed's stance itself will continue to depend on data, and the outlook is still uncertain.

Q What is the future outlook for the foreign exchange market?

The Federal Reserve currently has a policy of raising interest rates further.



Under such circumstances, yields on US government bonds are likely to rise, so we believe that the environment will continue where the dollar is likely to appreciate and the yen will weaken. The point is that it will.



At this point, the Fed's direction is still unclear.



Inflation and other economic indicators, which will be announced in the future, will affect this.



If it is decided that the pace of interest rate hikes cannot be slowed down, or that the peak of interest rate hikes must be made higher, the possibility remains that the dollar will rise above 150 yen to the dollar and reach around 155 yen. I believe that

Q What impact will it have on the Japanese economy?

Looking at Japan's import price statistics, we can see that the depreciation of the yen has had a very large impact on import prices.



Even if the yen does not depreciate further in the future, if the current level of 140 yen to the dollar continues, or close to 150 yen, the depreciation of the yen will push up prices, which will encourage price pass-through. may continue to push up



Going forward, it is possible that the depreciation of the yen will be passed on to prices over the next year, and prices will continue to rise as a result.

Q What points should we pay attention to in the future?

I believe that the depreciation of the yen against the dollar over the past six months or so has been led by the monetary policy of the United States.



In the short term, it will be crucial to see how the December FOMC charts the course of US monetary policy going forward.



The current situation is that at some point the pace of rate hikes will be decelerated or even halted.



I believe that US monetary policy is approaching a turning point.



In that sense, I believe that the high dollar and weak yen that have continued for the past six months are now at a major peak or peak.