Hong-Kong
DailyExpertNews
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The Bank of Japan has decided to maintain its extremely accommodative monetary policy, defying market expectations that rising inflation could force the central bank to adjust its key yield curve management policies and allow interest rates to rise further.
The BOJ kept its yield curve control (YCC) targets unchanged after concluding a two-day policy meeting on Wednesday. It left short rates at an ultra-dovish minus 0.1% and the 10-year Japanese government bond (JGB) yield at 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 likely to recover in the middle of the projection horizon,” 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 to the dollar, down 1.8%. Last Friday, it hit a seven-month high against the dollar.
Last month, the BOJ shocked global markets by allowing the 10-year JGB rate to move 50 basis points on either side of the 0% target. rates continue to rise.
The unexpectedly aggressive move caused stocks to plummet while the yen and bond yields rose.