Bank Of Japan Keeps Interest Rates And Yield Curve Policy Unchanged
The Bank of Japan has once again decided not to change its interest rate policy in a recent meeting. In addition, BOJ has also decided to continue its yield curve control policy. Overall, the markets are disappointed as they were expecting a more hawkish stance from the BOJ.
After the announcement by BOJ, the Japanese Yen (JPY) turned lower and lost 2% of its value against the US Dollar. As a result, the rate of USD/JPY was last seen near the 130.75 level, which indicates the USD strength. Similarly, the government bonds of Japan were also down by 3% after the announcement.
Japan's Interest Rate Remains Unchanged at -0.1%
The short-term policy of the BOJ remains unchanged, and so does the long-term policy. So, for now, the interest rate in Japan is set at -0.1%, which is a rare occurrence when we look around the world.
According to experts, this is the 7th year in a row that Japan is maintaining its policy of low and even negative interest rates.
The central bank also made it clear that it will be maintaining the yield of its 10-year bonds between 0.5% & -0.5%. However, the markets were expecting a change in the yield curve policy from the central bank.
Earlier, analysts were of the view that the yield curve control would get a wider range. And the reason for this expectation was the central bank's struggle to manage inflation in Japan.
For now, the inflation target for BOJ is set at 2% on a yearly basis. That's why the bank has made it clear that its policies will continue to support the country's economy.
In addition, BOJ also made a forecast that short-term inflation will remain elevated. And it will only be around the mid of 2023 that we see the inflation go down.
In a world full of hawkish central banks, it seems that Japan is a rare exception and is following a path of its own! And that's not a bad thing considering Japan is still a strong economy in the world.