Bank of Japan decided to maintain monetary policy as expected

The Bank of Japan (BOJ) decided to maintain its ultra-loose monetary policy at its meeting today, in line with market expectations. However, this contrasts with other central banks around the world, which are pursuing a tight monetary policy to curb inflation.

At the two-day meeting, which ended today (September 22), the BOJ’s Board decided to leave the policy rate unchanged at -0.1% and to keep the target yield on 10-year government bonds at around -0.1% to support the economic recovery.

In the past, the yen fell sharply against the U.S. dollar. This reflected the fact that the gap between Japanese and U.S. interest rates was widening.

Today’s BOJ monetary policy stabilization comes at a time when the U.S. Federal Reserve (Fed) continues to raise interest rates. At its last meeting on Wednesday (September 21), the Fed raised the short-term interest rate by 0.75% to 3.00-3.25%. This was the third 0.75% rate hike in three consecutive meetings and signals that it will continue to adjust rates in 2023.

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