TOKYO — The Bank of Japan kept its ultra-low interest rates unchanged Friday, affirming Gov. Kazuo Ueda’s policy of trying to nurture sustainable inflation.
The BOJ decided to maintain its cap on the 10-year Japanese government bond yield at 0.5% and kept short-term interest rates at minus 0.1%.
The yield on 10-year JGBs has been stable under the bank’s 0.5% cap since global bond yields fell in March owing to financial-system concerns in the U.S. and Europe.
The BOJ’s decision comes after mixed action by the Federal Reserve and European Central Bank earlier this week. The Fed held rates steady after 10 consecutive increases, while the ECB raised interest rates by a quarter percentage point and signaled more increases ahead.
Ueda, who started his job in April, has said the risk of premature rate increases in Japan could be bigger than a delay in monetary tightening. Ueda has said inflation will likely fall below the bank’s 2% target later this year.
The pace of increase in Japan’s overall consumer prices has slowed recently because of government measures to ease the burden of higher energy costs. But some economists say inflation might be more sustained than the BOJ expects because consumer prices excluding fresh food and energy keep rising.
This story originally appeared on Marketwatch
