BOJ Maintains Ultra-Loose Policy, Heightens Scrutiny on Rising Prices and Yields

The Bank of Japan (BOJ) has decided to maintain ultra-low interest rates and continue its massive stimulus program, signaling that it is not in a hurry to phase out its support for the economy. While other central banks have indicated their intention to rein in inflation by keeping borrowing costs high, the BOJ believes that inflation is not slowing as much as expected. Governor Kazuo Ueda emphasized the need to assess data on wages and service prices before raising interest rates. The yen fell sharply on the BOJ's dovish remarks, prompting speculation about a policy shift. However, Ueda stated that uncertainties remain and that more time is needed to achieve the 2% inflation target. The BOJ faces challenges in exiting its radical stimulus, including weak global economic signs and the risk of triggering a spike in bond yields.