(Bloomberg) — The yen extended its declines against the dollar as Bank of Japan Governor Kazuo Ueda spoke of uncertainties due to tariffs, after the bank kept its rates steady and pushed back the expected timing of its price target.

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Japan’s currency dropped as much as 1.2% to 144.74, and 10-year government bond futures held on to advances after earlier rising as much as 69 ticks to 141.34. Overnight index swaps now show only about a 33% chance of a rate hike by the end of the year compared with certainty in early April.

Ueda said that the likelihood that the BOJ’s outlook will be realized isn’t as high as it was before, and that uncertainty is extremely high due to tariff measures. The BOJ now expects inflation to be consistent with its 2% goal around the second half of its outlook period, which was extended by a year to include fiscal 2027.

READ: BOJ Slashes Growth Outlook, Delays Timing to Reach Price Target

“The BOJ’s outlook report was more dovish than expected,” said Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities Co. “This likely signals the intention to wait for a clearer picture of the impact of US tariffs before resuming rate hikes.”

Still, Ueda said that the BOJ continues to maintain a stance toward raising interest rates as its price goal is within sight. He also said that the delay in the price target timing doesn’t mean that there will be a delay in hikes.

What Bloomberg strategists say...

“USD/JPY traders are making it clear they wanted clarity on the BOJ’s outlook, not more voices saying they aren’t confident, which is translating into a weaker yen.”

— Mark Cranfield, Markets Live strategist. Read more on MLIV.

The yen has gained against the dollar for the past four consecutive months, reaching its highest since September last week, as Trump’s trade war drives selling of US assets and haven demand. Net long positions on the yen among speculative traders recently climbed to an all-time high, according to data from the Commodity Futures Trading Commission.

“Once today’s BOJ event is over, there will be little reason to move toward yen buying,” said Takeshi Ishida, a currency strategist at Kansai Mirai Bank. “If the upcoming US jobs data comes out strong, yen weakness to around the 147 level against the dollar is possible due to position adjustments ahead of Japan’s holiday period.”

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—With assistance from Saburo Funabiki.

(Adds details from the BOJ Governor’s news conference, and a strategist comment.)

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