by Leika Kihara
TOKYO (Reuters) – The Bank of Japan (BoJ) left monetary policy unchanged on Friday while deciding to conduct a thorough review of its accommodative policy, setting the stage for its new governor Kazuo Ueda to gradually end the stimulus program. decided by his predecessor.
The Japanese central bank unsurprisingly decided to maintain the target for short-term rates at -0.1% and to contain the yield on ten-year government bonds around zero.
The BoJ, however, changed its forecast, removing any reference to the need to keep interest rates at their “current or lower levels”.
The institution also said it would examine the various monetary easing measures taken over the past 25 years to combat deflation, and their impact on the economy and prices.
“The Bank has decided to carry out a general review of monetary policy, within about a year to a year and a half,” the BoJ said in a statement.
“The BoJ will continue to maintain stability in funding, primarily from corporates, and financial markets, and will not hesitate to take additional easing measures if necessary,” it added.
Kazuo Ueda should reassure the markets during a press conference and announce that the BoJ is in no hurry to raise interest rates, particularly given the uncertainty weighing on the economy.
Rising inflationary pressures, however, could cast doubt on the Japanese central bank’s argument that recent cost-induced price pressures will soon fade.
(Report Leika Kihara; Camille Raynaud)
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