According to news on April 21, the Bank of Japan is expected to maintain its ultra-loose monetary policy in next week’s interest rate review, including its interest rate target and a 0.5% cap on 10-year government bond yields, according to four people familiar with the matter.
While wages are rising and inflationary pressures are building, the BOJ is in no rush to scale back stimulus given the risk of slowing overseas growth and uncertainty over whether wage gains will last next year, the sources said.
“The BOJ can be patient in considering adjustments to yield curve control as inflation has not been consistently hitting its target,” one of the sources said. At next week’s meeting, the BOJ may also refrain from making major changes to its forward guidance, including a pledge to keep interest rates at “current or lower” levels, the sources said.
But since Japan has already lifted COVID-19-related restrictions, the BOJ may drop references to the impact of the outbreak in the coming months, most likely at its June meeting.
