GBP/JPY faces challenges as US President-elect Donald Trump's renewed tariff threats have dampened market sentiment. The Pound Sterling may gain ground due to the hawkish mood surrounding the BoE policy decision next month. BoE Deputy Governor Lombardelli requires more evidence of easing inflation before supporting another rate cut. GBP/JPY continues its losing streak for the fifth successive session, trading around 191.10 during the European hours on Wednesday.
For the biggest central banks like the US Federal Reserve , the European Central Bank or the Bank of England , the mandate is to keep inflation close to 2%. What does a central bank do when inflation undershoots or overshoots its projected target? A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate.