AUD/JPY clings to gains near 94.50 as investors doubt BoJ’s rate hike plans

• AUD/JPY trades firmly near 94.50 as investors see BoJ’s rate hike plans deferring to early 2026.

• Japan’s Ishiba warns that higher borrowing costs could dampen government’s spending plans.

• The Australian Dollar fails to capitalize on the positive outcome from US-China trade talks.

The AUD/JPY pair holds onto four-day rally to near 94.50 during Asian trading hours on Wednesday. The cross exhibits strength as investors start doubting over whether the Bank of Japan (BoJ) will raise interest rates again this year.

On Monday, Japan’s Prime Minister Shigeru Ishiba cited concerns over rising interest rates by the BoJ, warning that they could hinder Tokyo’s spending plans. The statement from PM Ishiba came at a time when the economic outlook of Japan has become uncertain due to the fallout of the tariff policy by United States (US) President Donald Trump.

A Reuters poll in the June 2-10 period showed that a slight majority of economists expect the BoJ to keep interest rates steady at 0.5% by the year-end. The survey also showed that none of the economists expected the Japanese central bank to raise its key borrowing rate in the next week’s monetary policy announcement.

On the contrary, BoJ Governor Kazuo Ueda has kept the door open for further tightening the interest rate policy if officials get convinced that the underlying inflation moves around 2%.”

Meanwhile, the Australian Dollar (AUD) exhibits a sluggish performance even though Washington and Beijing have reached a “framework” to execute the trade deal made in Geneva last month. However, the framework is needed to be approved by both United States (US) President Donald Trump and Chinese leader XI Jinping.

A positive outcome from the two-day trade talks between the US and China is favorable for the Aussie Dollar, given that the Australian economy relies heavily on its exports to Beijing.