The Bank of Japan (BoJ) unsurprisingly maintained its ultra-accommodating monetary policy on Friday, despite inflation in the country which remains well above its 2% target and the great weakness of the yen against the dollar.
The BoJ will continue its unlimited bond purchases so that ten-year Japanese yields do not exceed 1%, its new red line set in July, and has retained its negative short-term key rate -0.1%.
Highlighting a context of extremely high uncertainties surrounding the economy and financial markets in Japan as in the rest of the world, the BoJ intends to patiently continue its monetary easing, while reacting flexibly to developments in the economy, prices and financial conditions, according to its press release.
The BoJ also reaffirmed that it would not hesitate to take further monetary easing measures if necessary, although some observers thought that it would henceforth stop using this formulation.
This status quo immediately pulled the yen down against the dollar and the euro: around 03:30 GMT the greenback was worth 148.16 yen while it was hovering around 147.74 yen just before the BoJ announcements.
The institution also continues to believe that the rise in consumer prices in Japan will probably slow down in the coming months, a prospect which justifies maintaining its ultra-accommodating course.
Inflation in the archipelago, however, remained stable in August, 3.1% over one year excluding fresh products as in July, according to government data published earlier this Friday, while economists were banking on a small slowdown.