THE Bank of Japan (BOJ) today maintained its ultra-loose monetary policy, despite increasing inflation pressure fuelling speculation on when it may change course.

Unlike other major central banks which have raised interest rates, the BOJ has this year stuck to sub-zero borrowing costs in order to give firms access to cheap credit.

Instead in July it tweaked its so-called yield curve control range for government bonds, allowing them to fluctuate between plus and minus 0.5 percentage points of its target.

Today it stuck to this policy, in line with market expectations, but said it “will not hesitate to take additional easing measures if necessary”.

“With extremely high uncertainties surrounding economies and financial markets at home and abroad, the bank will patiently continue with monetary easing while nimbly responding to development in economic activity and prices as well as financial conditions,” it said.

The decision came after BOJ governor Kazuo Ueda said in a recent interview the central bank may have enough data by the year’s end to decide whether to change its long-standing easy money policy.

This prompted many economists to tweak their rate increase forecasts, with half now predicting a hike in the first half of 2024, Bloomberg News reported. – AFP, September 22, 2023.