The decision of the Central Bank of Japan (BOJ) to keep its interest rates unchanged closed the curtain on policy meetings by major central banks this week.
The BOJ’s dovish stance is in stark contrast to the US Federal Reserve and the Central Bank of Engaland (BOE) raising interest rates this week to combat inflationary pressures.
The BOJ kept interest rates unchanged at a low of -0.10% and targeted 10 -year bond yields at around 0% as widely expected by the market.
According to a statement issued after the decision, the BOJ said the Japanese economy is improving on trend.
The comments were seen as less optimistic than previous meetings in January, where the central bank said the economy was showing more obvious signs of improvement.
In addition, the BOJ also warned of new risks posed by the Ukraine-Russia crisis by saying it could destabilize financial markets and lead to a sharp spike in raw material costs.
While inflation is seen to be approaching or exceeding the 2% target in the next few months, the BOJ is not interested in withdrawing its stimulus as it sees energy -induced price increases as temporary.
The latest Japanese inflation data published in the Asian session showed consumer prices were below the central bank’s target with a 0.6% year -on -year increase in February. However, this figure is the fastest increase in two years.
Growth in the world's third-largest economy is expected to come to a halt in the current quarter as supply disruptions and Covid-19 restraints have caused production and consumption to stagnate.
