Yen under pressure, bonds volatile after BOJ holds rates steady

Those late moves came as BOJ Governor Kazuo Ueda said in a post-meeting news conference that many policy board members see inflation risks as skewed to the upside, and that the influence of currency volatility on inflation may be larger than in the past.

The central bank held the key rate at 1%, having raised it in June. It signalled its resolve to continue pushing up borrowing costs, warning for the first time that underlying inflation could exceed its target.

"I got the impression that the statement was somewhat hawkish," said Masato Koike, senior economist at Sompo Institute Plus. "The likelihood of an October hike has increased."

Over the remainder of this year, the BOJ has policy meetings in September, October and December.

The yen remained under pressure while Japanese government bonds turned volatile on Friday after the Bank of Japan held interest rates steady, as widely expected, while signalling additional tightening ahead.

The yen was 0.5% weaker at 160.33 per U.S. dollar as of 0755 GMT, roughly where it was before the BOJ's announcement, which came when most other financial instruments were in the midday trading recess.

On Thursday, the yen had surged as much as 3.6% from near a four-decade low after Japanese authorities conducted the first intervention in three months to prop up the ailing currency.

The Nikkei share average trimmed gains but still ended the day 4% higher. Chip-related shares rallied, in line with gains on Wall Street overnight after Microsoft delivered forecasts that eased fears about the industry's massive AI infrastructure spending.