Japan’s central bank decided on Friday to maintain its ultra-low interest rates measures, but to allow greater flexibility in its yield curve control policy.
At a two-day policy meeting, Bank of Japan (BOJ) Governor Kazuo Ueda and his eight board colleagues made the decision to keep short-term interest rates at minus 0.1 percent and guiding 10-year government bond yields around zero percent within the 0.5 percent cap, according to a statement released by the BOJ.
However, the central bank said it will conduct its yield curve control with greater flexibility, regarding the upper and lower bounds of the range as references, “not as rigid limits.” The BOJ also said it will “offer to purchase 10-year Japanese government bonds at 1.0 percent every business day through fixed-rate operations,” instead of the previous rate of 0.5 percent.
Meanwhile, in a quarterly outlook report published after the meeting, the BOJ revised down growth forecast for the world’s third-largest economy, saying it is expected to grow 1.3 percent in the current fiscal year, compared with the 1.4 percent growth estimated in April.
“Japan’s economy is likely to continue recovering moderately for the time being, supported by factors such as the materialization of pent-up demand, although it is expected to be under downward pressure stemming from a slowdown in the pace of recovery in overseas economies,” the central bank said.
The BOJ raised its inflation outlook for fiscal 2023 to 2.5 percent, up from its previous forecast of a 1.8 percent increase.
Source: Kuwait News Agency