The Bank of Japan means a very simple policy » Amrita Bazar
The Bank of Japan decided to maintain its ultra-loose monetary policy, defying market expectations that rising inflation could force the central bank to adjust its yield curve adjustment policy and interest rates interest could increase further.
The BOJ left its yield curve control (YCC) targets unchanged following a two-day policy meeting on Wednesday. This left short-term interest rates at a remarkable minus 0.1% and the 10-year Japanese government bond (JGB) yield around 0%.
The YCC policy is a pillar of the central bank’s efforts to keep interest rates low and stimulate the economy.
“The Japanese economy is expected to recover midway through the forecast period,” the central bank said in a statement, but added there could be downward pressure due to rising commodity prices. and a slowdown in foreign economies.
The Japanese yen weakened against the US dollar immediately after the announcement. It last traded at ¥130.47, down 1.8%. It hit a seven-month high against the greenback last Friday.
Last month, the BOJ surprised global markets by allowing the 10-year JGB yield to move 50 basis points either side of the 0% target. The move led to speculation that the central bank could follow the same path as other major economies. Rates continue to rise.
The surprisingly tough decision sent stocks tumbling, while the yen and bond yields rose.
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