Hong Kong
CNN
—
The Bank of Japan has decided to maintain its ultra-easy monetary policy, defying market expectations that rising inflation could force the central bank to tweak its key yield curve control policy and allow interest rates to rise further.
The BOJ kept its yield curve control (YCC) targets unchanged as it concluded a two-day policy meeting on Wednesday. It left the short-term interest rate at an ultra-dovish minus 0.1% and the 10-year Japanese Government Bonds (JGB) yield around 0%.
The YCC policy is a pillar of the central bank’s effort to keep interest rates low and stimulate the economy.
“Japan’s economy is likely to recover toward the middle of the projection period,” the central bank said in a statement, but added that downward pressure could remain from high commodity prices and slowdowns in overseas economies.
The Japanese yen weakened against the US dollar shortly after the announcement. It last traded at 130.47 yen per dollar, down 1.8%. Last Friday, it hit a seven-month high against the greenback.
Last month, the BOJ shocked global markets by allowing the 10-year JGB yield to move 50 basis points on either side of its 0% target, in a move that stoked speculation the central bank may follow the same direction as other major economies by allowing rates to rise further.
The unexpectedly hawkish decision caused stocks to tumble, while sending the yen and bond yields soaring.
Source : CNN
