Japan’s central financial institution determined Friday to keep up its key rate of interest at minus 0.1%, defying aggressive hikes by friends within the US and Switzerland, citing some financial weak spot stemming from the pandemic and excessive commodity costs.
To maintain the 10-year yields at round zero, the Financial institution of Japan (BoJ) “will buy a crucial quantity of Japanese authorities bonds (JGBs) with out setting an higher restrict”, it stated.
Restoration for the world’s third greatest financial system is underpinned by waning COVID-19 impression and supply-side constraints, enhancing exterior demand, accommodative monetary situations and the federal government’s financial measures, the central financial institution stated.
A excessive inflation price at round 2% is being attributable to rising vitality and meals costs, which can keep for a while “however ought to decelerate thereafter”, it stated.
The central financial institution’s continued accommodative financial coverage stance, in stark distinction with the US Federal Reserve’s tightening, has been exerting downward strain on the yen.
The foreign money tumbled to a 24-year low on 14 June at above yen (Y) 135 to the US greenback, earlier than rebounding to a two-week excessive of round Y132. At round midday on Friday, the yen was buying and selling at Y134.10.