The Bank of Japan (BOJ) yesterday maintained its long-standing, ultra-loose monetary policy and offered no guidance on its plans in the new year, sending the yen down against the US dollar and boosting stocks.
Speculation had been swirling for weeks that central bank officials would shift away from negative interest rates and a tight grip on bond yields as inflation picks up.
That came after BOJ Governor Kazuo Ueda this month said that handling monetary policy would “become even more challenging from the year-end and heading into next year.”
Photo: EPA-EFE
While most other major central banks hiked borrowing costs for more than a year in a bid to tame prices, the BOJ has refused to budge as it looked to kick-start the world’s No. 3 economy.
After a two-day meeting, the bank yesterday said that “with extremely high uncertainties surrounding economies and financial markets at home and abroad, the bank will patiently continue with monetary easing.”
Ueda later told reporters that “the degree of certainty [of achieving the 2 percent target] is rising gradually, but we need to see whether a positive cycle of wages and prices can be achieved.”
“I think rushing to change our policies is inappropriate,” he said.
The yen weakened to ￥144.59 against the greenback after the BOJ announcement, from ￥142.65 in early trading, although the Nikkei 225 index gained 1.4 percent to close at 33,219.39 in Tokyo trading.
“Before the meeting, there were expectations for policy changes, including wording amendments in the statement,” Sumitomo Mitsui Banking Corp chief foreign exchange strategist Hirofumi Suzuki said.
Still, “the movement of a weaker [yen] is unlikely to become a trend, partly because expectations remain for a policy revision for January-March next year.”
Additional reporting by Reuters
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