TOKYO (Reuters) – The Bank of Japan (BoJ) maintained its ultra-accommodative monetary policy on Tuesday, as expected, as Japanese central bank officials want more time to determine whether wages will rise sufficiently to control inflation.
At the end of its two-day meeting, the BoJ maintained its short-term interest rate target at -0.1% and its commitment to setting long-term yields around zero.
It also revised downwards its inflation forecast for the next fiscal year, which will begin in April, to 2.4% compared to 2.8% in its previous quarterly report on the economic outlook in October.
Traders will be scrutinizing BoJ Governor Kazuo Ueda’s press conference at 06:30 GMT for any clues about the timetable the central bank will follow to make a shift in its monetary policy.
Raising short-term interest rates is expected to be the next step Kazuo Ueda will take to move away from the ultra-accommodating policy of his predecessor at the head of the institution.
The US Federal Reserve (Fed) and the European Central Bank (ECB), whose meetings are scheduled for next week, increased rate hikes last year in an attempt to control inflation and are now questioning the appropriate time to cut rates this year.
In Japan, inflation has exceeded the BoJ’s 2% target for more than a year. However, Kazuo Ueda stressed that it was necessary to be patient with regard to a potential increase in rates, saying he was waiting for additional evidence that inflation will settle sustainably around 2%, in parallel with a solid increase salaries.
(Reporting Leika Kihara and Tetsushi Kajimoto; Jean Terzian)
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