Bank of Japan maintains ultra-loose policies
TOKYO
The Bank of Japan (BoJ) maintained its signature monetary easing measures yesterday, as speculation grows of a shift away from its ultra-loose stance.
After a two-day policy meeting, board members decided to keep interest rates in negative territory, a global anomaly that has driven down the yen against the dollar, while also leaving unchanged the band in which rates for 10-year government bonds fluctuate.
Analysts had predicted the BoJ would stand pat, partly to avoid further disruption after an earthquake on New Year's Day killed at least 233 people in central Japan.
But Governor Kazuo Ueda is eventually expected to move away from the bank's long-standing ultra-loose policies that economists see as unsustainable.
"As a virtuous cycle from income to spending gradually intensifies, Japan's economy is projected to continue growing at a pace above its potential growth rate," the BoJ said.
Even so, "there are extremely high uncertainties surrounding Japan's economic activity and prices," it added.
"The bank will patiently continue with monetary easing while nimbly responding to developments in economic activity and prices as well as financial conditions."
Decisionmakers have stood firm to the measures, even as inflation rises and other central banks tightened monetary policy since 2022 as they tried to rein in runaway prices.
Japan's inflation, excluding fresh food, slowed again in December to 2.3 percent, figures showed on Jan. 19
But the BoJ sees the increases as driven by temporary factors including higher energy costs, and yesterday it revised down its inflation forecast for the next fiscal year to 2.4 percent from 2.8 percent.
The bank in April launched a review of its "non-traditional" attempts to end the deflation that has plagued Japan since the 1990s.
And policymakers have for several months hinted that they could be willing to change direction, including by making minor tweaks to their yield curve control program that keeps a grip on bonds.
