By Megumi Fujikawa
TOKYO (Dow Jones)–The Bank of Japan (BoJ) is keeping its loose yen weakness monetary policy Celebration. The central bank on Thursday left short-term interest rates at minus 0.1 percent and its target for the 10-year Japanese government bond yield at around zero.
The decision confirms further policy divergence between the US and Japan and increases downward pressure on the yen. The yen briefly fell to a fresh 24-year low following the BoJ announcement. On Wednesday, the US Federal Reserve raised interest rates by 0.75 percentage points and announced further large-scale hikes.
Consumer inflation in Japan reached 3 percent in August, beating the bank’s 2 percent target for the fifth straight month. However, it is still significantly lower than in the USA, where inflation is still above 8 percent.
The yen’s recent weakness has pushed up import prices as Japan is largely dependent on imports for food and energy. Their prices are already rising due to the Ukraine war and global supply bottlenecks.
Japanese officials have stepped up their verbal interventions regarding the currency this month. Finance Minister Shunichi Suzuki said Tokyo is not ruling out steps to halt the yen’s fall, including government intervention to sell dollars and buy yen.
However, BoJ Governor Haruhiko Kuroda has stated that he does not see monetary tightening as an appropriate means of stabilizing the yen. Kuroda recently stated that inflation is likely to fall to 1.5 percent by 2023.
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(END) Dow Jones Newswires
September 22, 2022 00:01 ET (04:01 GMT)