The yen was little changed near an all-time low against the euro on Thursday, as investors showed muted reaction after the Bank of Japan held interest rates unchanged at 0.5 percent as expected but did so on a split vote. The dollar was narrowly mixed after recovering from a brief sell-off, but it stayed near a record low against the euro and a 26-year trough versus sterling.
At the BOJ policy meeting, only one of the nine board members voted to lift rates, compared with market expectations that up to three members might vote for a hike.
The yen initially slipped against the dollar and the euro as investors took the vote to suggest that the central bank may not be in hurry to raise rates, despite expectations of an increase as early as August.
"After seeing only one vote for lifting rates this time, the timing for next rate increase may be delayed until September or October," said Kengo Suzuki, currency strategist at Shinko Securities. But some traders refrained from selling the yen further on the grounds that a BOJ rate hike in August was still almost certain and that the voting split did little to alter overall market expectations.
The dollar edged down 0.08 percent from Wednesday's New York close to 122.27 yen. On Wednesday it had dropped as low as 120.99 yen, a one-month low, but recovered as Japanese importers and retail investors picked up the US currency. The euro was flat at 168.23 yen, staying off an all-time high of 168.55 yen hit on Monday.
In a midterm review of its twice-yearly outlook report, the Japanese central bank said it saw consumer prices moving in line with its April report and kept its assessment of the economy unchanged, saying it is expanding moderately, as widely expected.
Now the market will look to comments from BOJ Governor Toshihiko Fukui for more hints on the central bank's rate outlook when he speaks to reporters from 0630 GMT.
Against the dollar, the euro was up 0.09 percent at $1.3757, hovering within reach of a record high of $1.3787 hit in the previous session. Sterling was at $2.0321, off a 26-year high of $2.0363 reached on Wednesday. The market caught its breath after traders bought back the dollar on Wednesday as US stocks clawed back from a fall driven by ratings agency reports of possible ratings cuts on around $17 billion of debt related to risky mortgages.
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