The Bank of Japan maintained its ultra-loose monetary policy on Thursday despite the sharp weakening of the yen amid tightening stance adopted by its global peers. <\/p>\n
The policy board, governed by Haruhiko Kuroda, decided to maintain a negative interest rate of -0.1 percent on current accounts that financial institutions maintain at the central bank.<\/p>\n
The bank will 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.<\/p>\n
The BoJ extended the deadline for the application for the special funds provided mainly to small and medium-sized firms in response to Covid-19 by six months. Thereafter, the bank will shift the ambit of the programme to meet a wide range of financing needs.<\/p>\n
The bank vowed to take additional easing measures if required. The BoJ expects to keep the short- and long-term policy interest rates at their ‘present or lower levels’. <\/p>\n
The BoJ announcement came after the U.S. Federal Reserve hiked its key rate by 75 basis points for the third straight time on Wednesday. <\/p>\n
Japan’s consumer price inflation rose to 3.0 percent in August but it is widely expected to decelerate next year. <\/p>\n
The BoJ will not lift its short-term policy rate even as underlying inflation reaches 2 percent, Capital Economics economist Marcel Thieliant, said. <\/p>\n
And while the Bank has come under renewed pressure to defend its yield target in recent days, the economist expects US long-term Treasury yields to rise much further, so that upward pressure will eventually subside. <\/p>\n