JEQ - Bank of Japan again tweaks yield curve control policy holds interest rates
2023-10-31 01:43:03 ET
- The Bank of Japan kept its short-term interest rate target unchanged at -0.1% on Tuesday but also took steps to make its yield curve control policy more flexible, as widely expected.
- In its release, the Bank of Japan said the target level of the 10-year JGB yield will be held at 0%, but will take the upper bound of 1% “as a reference.
- Meantime, policymakers viewed that Japan's economy was likely to continue recovering moderately, supported by pent-up demand but highlighted downward pressure from a slowing global recovery. The board reiterated that it will not hesitate to take extra easing measures if needed.
- Furthermore, in a quarterly outlook report, the BoJ revised higher inflation forecasts for FY 2023 and 2024 to 2.8% from 1.3% and 1.2%, respectively, exceeding its 2% target. For FY 2025, the CPI is projected to ease to 1.7%, due to the waning impact of high oil prices and the past rise in import prices.
- The previous forecast was 1.9% for 2024 and 1.6% for 2025. Japan’s fiscal year runs from April to March.
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Bank of Japan again tweaks yield curve control policy, holds interest rates