The Bank of Japan on Thursday maintained its ultra-low interest rates and pledged to keep them there. The decision occurred after the Federal Reserve of the United States raised interest rates by 75 basis points for the third time in a row.
The policy gap drove the yen to a new 24-year low and above the 145-to-dollar threshold. Markets are looking forward to BOJ Governor Haruhiko Kuroda’s press conference later in the day to hear his thoughts on the inflation forecast and the impact of the Japanese currency’s significant losses. The yen fell to a 24-year low of 145.405 per dollar shortly after the BOJ statement but later traded around 144.90.
The Bank of Japan remains an outlier amid a worldwide wave of central banks reducing support to combat rising inflation. It will almost certainly become the world’s last major monetary authority with a negative policy rate. Haruhiko Kuroda, Japan’s central bank governor, has left the door open for further stimulus to help the world’s third-largest economy. However, he has ruled out any immediate removal of support, believing that wage growth is necessary to stably attain his 2% inflation objective. A weak yen has been a source of worry for Japanese authorities since it raises the cost of importing gasoline and basic goods.