BOJ keeps ultra-loose policy, focus shifts to exit timing
By Leika Kihara
TOKYO (Reuters) -The Bank of Japan maintained ultra-loose monetary settings on Tuesday in a widely expected move, underscoring policymakers' preference to await more clues on whether wages will rise enough to keep inflation durably around its 2% target.
The central bank also made no change to its dovish policy guidance that pledges to take additional monetary easing steps «without hesitation» if needed.
Markets are focusing on any hints Governor Kazuo Ueda offers at his post-meeting briefing on how soon the central bank could end its negative interest rate policy.
At the two-day meeting that ended on Tuesday, the BOJ kept its short-term rate target at -0.1% and that for the 10-year government bond yield around 0%. It also left unchanged a loose upper band of 1.0% set for the 10-year yield.
«There are extremely high uncertainties surrounding Japan's economy and prices,» the BOJ said in a statement.
Governor Ueda is expected to hold a news conference at 3:30 p.m. (0630GMT) to explain the policy decision.
Japan has seen inflation hold above 2% for over a year and some firms have signalled their readiness to keep raising wages, increasing the chance of a near-term policy shift.
In July, the BOJ relaxed its grip on long-term borrowing costs by raising a cap set for the 10-year bond yield. The cap was watered down to a loose reference in October in a sign Ueda was moving steadily toward dismantling his predecessor's radical stimulus.
More than 80% of economists polled by Reuters in November expect the BOJ to end its negative rate policy next year with half of them predicting April as the most likely timing. Some see the chance of a policy shift in January.
Analysts say the BOJ may find it easier to move in
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