BackBank of Japan keeps interest rates unchanged, gives dovish guidance on future policy
The Bank of Japan (BOJ) maintains ultra-low interest rates, indicating it is not rushing to end monetary stimulus.
PremiumThe Bank of Japan (BOJ) kept its ultra-low interest rates on Friday and gave dovish guidance on future monetary policy, indicating that it is not in a rush to end its significant monetary stimulus, according to Reuters news report.
The BOJ maintained a 0.1% interest rate and a target yield on 10-year government bonds of roughly 0% during the two-day meeting that ended on Friday, said Reuters in its news report.
Additionally, it kept the hard cap of 1.0% put in July and the reference band that allows the 10-year bond yield to move 50 basis points up and down daily around the 0% objective intact.
The BOJ reiterated its commitment in a statement announcing the decision to maintain ultra-loose monetary policy "as long as necessary to maintain the (2% inflation) target in a stable manner."
Japan's Nikkei share index reversed early losses after the Bank of Japan indicated on Friday that it was not in a rush to tighten policy while maintaining support.
Prior to this, the benchmark index had fallen nearly four-week low, following Wall Street's severe declines that were sparked by concerns of a more hawkish Federal Reserve.
Following a hint from BOJ Governor Kazuo Ueda in a newspaper interview earlier this month that the end of negative interest rates would occur as soon as this year, according to a Reuters, Friday's decision was widely awaited.
Data released earlier on Friday showed that core inflation has continued to rise for a 17th consecutive month, fuelling concerns that price pressures will force the BOJ to adopt a more hawkish stance, according to Reuters report.
As the Fed and the majority of its major peers follow the approach of raising rates for a longer period of time to combat stubborn inflation, the BOJ has been a worldwide outlier in maintaining ultra-easy stimulus.
"The BOJ is trying to get markets prepared for a future policy shift," said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute, according to Reuters report. "It probably wants to tweak a monetary policy framework that was designed to beat deflation."
Milestone Alert!Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.
