BOJ To Keep Loose Policy To Sustain Inflation

The Bank of Japan Governor Haruhiko Kuroda said the central would keep its loose monetary policy to maintain inflation at the 2% target and wage growth.

This statement raised market speculation among the Japanese bankers’ association that the BOJ may join other major central banks in tightening the money supply to control high inflation.

According to Kuroda, Japan as the world’s third-largest economy would grow firmly and stably this year, backed by accommodative monetary conditions. However, uncertainties such as inflation and the COVID-19 pandemic remain.

Additionally, the yen rebounded sharply based on speculation the BOJ may retract its loose monetary policy after it widened the yield cap range on 10-year Japanese government bonds (JGBs) last month.

Recently, the yen spiked to a seven-month high against the U.S. dollar due to rising expectations that the BOJ may veer away from its accommodative policies.

The yen’s momentum was also affected by media reports saying the BOJ was set to raise inflation forecasts in January to show prices near its 2% goal for the 2023 and 2024 fiscal years.

Source: Inquirer.net