2023-07-28 07:04:28
The Bank of Japan abruptly eased its grip on bond yields after allowing yields to move above half a percentage point levels, in its first sign that the possibility of a rate hike is possible in the upcoming meetings in light of current high inflation, which has touched its highest levels in decades.
At the two-day meeting that ended Friday, the BoJ fixed the short-term interest rate at -0.1 percent, in line with expectations, and the 10-year government bond yield at 0 percent.
He also maintained guidance allowing the 10-year yield to move 0.5% up and down around the 0% target, and stressed that this level would be a “reference” rather than a “hard limit”.
The Bank of Japan also said it would offer to buy 10-year Japanese government bonds at 1.0 percent in fixed-rate operations, instead of the previous rate of 0.5 percent, in a clear sign that the bank is accepting more monetary tightening.
The Bank of Japan raised its inflation forecast to 2.5 from 1.8 percent.
The Japanese Central Bank adheres to its stimulus policy as it awaits signs of more sustainable inflation, in contrast to the US Federal Reserve, which raised interest rates 11 times since last year, as well as the European Central Bank, which raised interest rates Thursday for the ninth time in a row, to reach the highest level in 22 years.
The Japanese yen reacted negatively to the decision to fix interest rates at negative levels for a temporary period, before resuming its upward path for the fifth consecutive session against the US dollar.
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