BOJ keeps ultra-loose policy, dovish guidance on outlook
Markets are focusing on comments from Governor Kazuo Ueda's post-meeting briefing for clues on how soon the bank could phase out the massive stimulus programme of his predecessor.
As widely expected, the BOJ maintained its short-term interest rate target of -0.1% and that for the 10-year bond yield around 0% at a two-day meeting that ended on Friday.
It also left unchanged an allowance band of 50 basis point set either side of the yield target, as well as a new hard cap of 1.0% adopted in July.
«Japan's economy is likely to continue recovering moderately,» the BOJ said in a statement announcing the decision, adding that inflation expectations have shown renewed signs of heightening.
The BOJ's decision contrasts with those of U.S.
and European central banks, which in recent meetings have signalled their resolve to keep borrowing costs high to rein in inflation.
The central bank made no change in its forward guidance, which retained a pledge to «take additional easing measures without hesitation» — language some market players thought might have changed to take on a more neutral tone.
With inflation exceeding the BOJ's target and the yen renewing its slide, markets are focusing on any signals Ueda could drop on the timing of a policy shift.
Data released earlier on Friday showed Japan's core inflation hit 3.1% in August, staying above the central bank's 2% target for a 17th straight month in a sign of broadening price pressure in the world's third-largest economy.
In a move seen by markets as a step toward an exit, the BOJ in July loosened its grip on long-term interest rates to allow them to rise more freely, a nod to increasing inflation.
Ueda told a recent interview the BOJ could have enough data by year-end to
