The yen plunged on Wednesday after the Bank of Japan decided to maintain its ultra-easy monetary policy, defying market expectations that rising inflation could force the central bank to move away from low interest rates
The BOJ kept its yield curve control targets unchanged as it concluded a two-day policy meeting on Wednesday. It left the short-term interest rate at an ultra-dovish minus 0.1% and the 10-year Japanese Government Bonds yield around 0%. The YCC policy is a pillar of the central bank’s effort to keep interest rates low and stimulate the economy. The surprise decision sent the yen tumbling. It briefly dropped 2.7% against the US dollar around noon. It later pared some losses, last trading 1.
It’s necessary to support the economy with our stimulus policy, to ensure companies can raise wages,” Kuroda said in comments published by Reuters. “By maintaining ultra-easy policy, we will strive to achieve our price target stably and sustainably accompanied by wage hikes.” Kuroda expects the core consumer inflation to slow below 2% toward the latter half of fiscal 2023. Kuroda is due to step down in April after a decade in office.
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