The Bank of Japan at its next meeting has again kept the discount rate at a negative level – minus 0.1%, Report informs.
The bank has maintained ultra-low interest rates and a pledge to keep supporting the economy until inflation sustainably hits its 2% target, suggesting it was in no rush to phase out its massive stimulus program, according to Reuters.
Markets are focusing on comments from Governor Kazuo Ueda’s post-meeting briefing for clues on how soon the bank could start raising interest rates from negative territory.
The Japanese yen fell after the decision to around 148.09 per dollar, near the psychologically important 150 level seen as authorities’ line-in-the-sand for currency intervention.
“The decision reflects a lack of confidence among policymakers that wage growth will gather enough momentum to achieve sustained inflation,” said Daisaku Ueno, chief currency strategist at Mitsubishi UFJ Morgan Stanley Securities.
As widely expected, the BOJ maintained a 0.1% interest charged on financial institutions’ excess reserves parked with the central bank, and a target for the 10-year government bond yield around 0%.
It also left unchanged an allowance band of 50 basis point set either side of the yield target, as well as a new hard cap of 1.0% adopted in July.
The BOJ’s decision contrasts with those of US and European central banks, which in recent meetings have signaled their resolve to keep borrowing costs high to rein in inflation.