Bank of Japan Maintains Stimulus, Remaining an Outlier in Policy Tightening

The Bank of Japan maintained its massive stimulus on Friday and has emphasized on risk from Ukraine crisis on its economy.

BOJ remained dovish and will remain an outlier on tightening monetary policy. Earlier U.S. Federal Reserve and Bank of England raise interest rates to tame down inflation which is running over their target range.

BOJ maintained its short-term rate target at -0.1% and that for the  10-year bond yield around 0% at the two-day policy meeting that ended on Friday.

“Japan’s economy is picking up as a trend,” the BOJ said in a statement.

The view was less optimistic than that of the previous meeting in January, when it said the economy was showing “clearer signs of pick-up.”

BOJ also warned of fresh risks from the Russian-Ukraine war and said it was destabilizing financial markets and largely pushing up input costs.

“There is very high uncertainty on the impact developments in Ukraine could have on Japan’s economy and prices via markets, raw material prices and overseas economies,” the statement said.

“With inflation and wage growth lagging other countries, the BOJ has no choice but to patiently maintain stimulus at least until Kuroda serves out his term in April 2023,” said Hiroshi Shiraishi, senior economist at BNP Paribas Securities, as reported by Reuters.