Bank of Japan keeps ultra-low rates despite US Fed tightening

by | Sep 22, 2022 | World

BOJ sticks to global outlier status as central banks elsewhere hike interest rates to tame inflation.The Bank of Japan has maintained ultra-low interest rates and dovish policy guidance as it seeks to reassure markets that it will continue to swim against a global tide of central banks tightening monetary policy to combat soaring inflation.
BOJ’s latest decision on Thursday came after the United States Federal Reserve delivered its third straight 0.75 percentage point rise on Wednesday and signalled more hikes, underscoring resolve not to let up in its battle to contain inflation.
As widely expected, the BOJ kept unchanged its -0.1 percent target for short-term interest rates, and 0 percent for the 10-year government bond yield by a unanimous vote.
The BOJ remains an outlier among a global wave of central banks withdrawing stimulus to battle soaring inflation and will likely become the last major monetary authority in the world with a negative policy rate.
Markets had focused on whether the BOJ will show initial signs of changing the approach by tweaking its pledge to keep interest rates at “current or lower” levels, and ramp up stimulus as needed to support the economy.
BOJ Governor Haruhiko Kuroda is expected to hold a news conference to explain Thursday’s policy decision.
Japan’s core consumer inflation quickened to 2.8 percent in August, exceeding the BOJ’s 2 percent target for a fifth straight month, as price pressure from raw materials and the falling yen broadened.
But Kuroda has …

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