TOKYO (Reuters) – The Bank of Japan will maintain ultra-low interest rates and dovish policy guidance on Thursday, a decision hours after its U.S. central bank The policy gap between the Bank of Japan (BOJ) and the Fed pushed the yen to
year lows, pushing up import costs and helping inflation stay at the BOJ’s 2% target for five straight months in August above.
Markets focus on whether BOJ Governor Haruhiko Kuroda will provide a stronger warning on the sharp fall in the yen or adjust his view that the near-term cost-push inflation will be short-lived.
“Japan’s consumer inflation is rising faster than expected, in part due to a weaker yen,” said Mari Iwashita, chief market economist at Daiwa Securities. For the BOJ, continue to say prices The rise will be temporary and it will become increasingly difficult.
In the two-day policy, after I finish Thursday, the Bank of Japan will maintain its short-term interest rate target at -0.1% and will 10 Annual government bond yields remain around 0%. Kuroda will hold a press conference after the meeting.
BOJ decision Will be released hours after the Fed wraps up its September meeting. 20-10 meeting. Market participants expect the US central bank to raise rates at least 75 basis points.
“Major central banks such as the Federal Reserve and Bank of England are about to continue raising interest rates to shrink their balance sheets. This brings further attention to the Bank of Japan’s dovish stance,” Iwashita said. “I don’t think the dollar’s uptrend is over. “
The country’s fragile recovery has forced the Bank of Japan to remain an outsider amid a wave of global central banks tightening monetary policy to combat soaring inflation.
While Kuroda responded He has pledged to maintain ultra-loose monetary policy to support the economy – which critics say will undermine government officials’ rhetoric to curb the yen’s decline.
At the policy meeting, the Bank of Japan is expected to end a pandemic relief funding program on schedule this month and discuss changes to policy guidance flagging COVID- Pandemic emerges as biggest economic risk.
But the Bank of Japan may keep key parts of its guidance pledging more stimulus unchanged, sources told Reuters Reuters, needs, and keeps rates at “current or lower” levels.