BOJ Keeps Ultra-low Rates, Focus Shifts to Ueda’s Inflation Views
![](https://japannews.yomiuri.co.jp/wp-content/uploads/2023/06/2023-05-31T025530Z_666878822_RC2G51AQWLA9_RTRMADP_3_JAPAN-ECONOMY-BOJ-1-1.jpg)
Bank of Japan Governor Kazuo Ueda speaks at a group interview with media in Tokyo, Japan, May 25, 2023.
12:45 JST, June 16, 2023
The yen’s renewed sharp declines, which drew verbal warning from the finance minister, may also keep inflation elevated and put the BOJ’s ultra-low interest rates under the spotlight.
“Excessive volatility is undesirable and it should move stably,” Finance Minister Shunichi Suzuki told reporters on Friday, adding that he expected the BOJ to work closely with the government to sustainably achieve its 2% inflation target.
The BOJ review came after the Federal Reserve’s decision on Wednesday to pause interest rate hikes as it closely watches the lagged economic impact of past monetary tightening.
As widely expected, the BOJ maintained its -0.1% short-term interest rate target and a 0% cap on the 10-year bond yield set under its yield curve control (YCC) policy.
While warning about risks to the global outlook, the BOJ stuck to its view Japan’s economy is headed for a moderate recovery thanks to a post-pandemic pickup in consumption.
Japan’s core consumer inflation hit 3.4% in April, staying above the BOJ’s target for over a year, keeping alive market expectations the bank will phase out YCC sometime this year.
Underscoring the dangers of misreading early signs of stubborn inflation, the European Central Bank raised borrowing costs to their highest level in 22 years on Thursday and signaled the likelihood of further hikes ahead.
Japan’s economy is making a delayed recovery from the pandemic and expanded an annualized 2.7% in the first quarter, with solid corporate and household spending moderating the blow from soft exports.
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