The Bank of Japan (BOJ) kept interest rates at historic lows on Friday. And said that it would maintain its present pace of yield curve management as it navigates a leadership transition. And contends with a severe recession in the Japanese economy.
Both the short & long policy interest rates were maintaine by the central bank at -0.1% & 0%, respectively.
The Bank of Japan BOJ stated that it will maintain the volatility in 10-year bond rates at 0.5% to minus 0.5% and that it will keep the pace of quantitative easing at its present level, with no shocks in advance of a change in its top management.
The meeting on Friday is the final one to be presided over by Governor Haruhiko Kuroda, whose term expires in April. After a vote on his nomination by Japan’s upper chamber later in the day. Economist Kazuo Ueda is expect to take over as head of the central bank.
Although experts anticipate a shift by the bank later this year. Ueda has indicated that he will continue the BOJ’s ultra-dovish position in the short term.
According to a statement from the BOJ, govt subsidies on energy prices & a reduction in the pressure from high commodity prices would likely cause inflation to decline by the middle of 2023.
This prediction was supported by recent statistics, which showed that manufacturer price inflation for February was less than anticipated.
Bank of Japan actually easing policy interest rates?
Tokyo consumer inflation (TCI). Which is typically a leading indicator of national inflation. Also came in below expectations for the month.
But, the BOJ also predicted that prices would start to rise once again near the end of the year and that the necessity to maintain an accommodating monetary policy was underscored by the mounting economic uncertainties.
The remarks follow statistics showing that the Japanese economy barely increased in the fourth quarter under mounting pressure from rising prices and declining manufacturing activity.
As global economic trends stagnate, Japan must likewise deal with a substantial decline in worldwide demand for its products.
In Dec, the BOJ unexpectedly broadened its yield curve control mechanism, setting off speculation that it will change its policies further and tighten up local monetary conditions.
But, the central bank has subsequently played down rumours of more tightening. Declaring that the action taken in December was “adequate.”
On account of the BOJ’s dovish stance and worries about increasing U.S. interest rates, the Japanese (Currency) yen fell 0.4%.