BoJ Retains Ultra-Loose Monetary Policy
(RTTNews) - Despite rising inflationary pressures, the Bank of Japan continued to maintain its ultra-loose monetary policy in contrast to the stance of its hawkish peers.
At the second rate-setting meeting chaired by new Governor Kazuo Ueda on Friday, policymakers unanimously voted to maintain a negative interest rate of 0.1 percent on current accounts that financial institutions maintain at the central bank.
The board also decided to continue to purchase a necessary amount of Japanese government bonds without setting an upper limit so that 10-year JGB yields will remain at around zero percent.
The board said it will "patiently" continue with monetary easing. The bank targets to achieve the price stability target of 2 percent in a sustainable and stable manner, accompanied by wage increases, the BoJ said.
Policymakers forecast consumer price inflation to decelerate towards of the middle of the fiscal 2023. Nonetheless, inflation is projected to accelerate again moderately with the improving output gap and rising medium-to long-term inflation expectations and wage growth.
The US Federal Reserve paused its rate hikes on Wednesday but remained hawkish. The European Central Bank raised its key rates by another quarter point on Thursday.
Earlier in a note, Capital Economics said the BoJ is unlikely to make major policy changes this year. The firm said the yield curve control may yet end next year.
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