The Bank of Japan maintained ultra-low interest rates on Friday and its guidance to keep borrowing costs at “present or lower” levels, signalling its resolve to focus on supporting the economy’s tepid recovery from the COVID-19 pandemic.
However, in a nod to the hit that the yen’s recent sharp declines may have on the economy, central bank said it must “closely watch” the impact exchange-rate moves could have on the economy.
At the two-day policy meeting that ended on Friday, the BOJ maintained its -0.1 per cent target for short-term rates and its pledge to guide the 10-year yield around 0 per cent by a 8-1 vote.
The decision was widely expected, but leaves the BOJ’s stance even more at odds with other major central banks, which are aggressively tightening policy to curb surging inflation.
Following are excerpts from BOJ Governor Haruhiko Kuroda’s comments at his post-meeting news conference, which was conducted in Japanese, as translated by Reuters:
RECENT YEN WEAKNESS
“Recent rapid falls in the yen heighten the uncertainty on the outlook and make it difficult for companies to set business plans. It’s therefore negative for the economy and undesirable.”
“What’s important is for companies that benefit from the weak yen to increase capital expenditure and wages.
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