TOKYO, Oct. 28 (Xinhua) -- The Bank of Japan (BOJ) on Friday maintained its ultra-easy monetary policy to support the economy in the face of a weak yen further inflating prices as the nation faces increasing costs of living.
At the conclusion of a two-day meeting, the BOJ Policy Board voted to retain its yield curve control program by setting its short-term interest rate at minus 0.1 percent and guiding 10-year Japanese government bond yields to around zero percent.
The central bank's board also voted to continue to buy unlimited amounts of 10-year bonds at a fixed rate of 0.25 percent every business day, in principle, to defend its upper limit on the key yield.
"For the time being, while closely monitoring the impact of COVID-19, the Bank will support financing, mainly of firms, and maintain stability in financial markets, and will not hesitate to take additional easing measures if necessary; it also expects short- and long-term policy interest rates to remain at their present or lower levels," the BOJ said in its official statement on monetary policy.
The BOJ and financial authorities in Japan are continuing to grapple with the resource-poor country's worsening economic fundamentals.
These, economists here highlighted, include stagnant wages amid ever-increasing costs for energy imports and raw materials, which, while negatively impacting consumption, are simultaneously seeing daily living costs spike.
In addition, the Japanese central bank's ultra-easy stance on monetary policy is seeing a widening gulf in interest rates with its global peers who are raising their rates to combat inflation.
The disparity has seen the yen drop to decades lows versus the U.S. dollar, leading to multiple interventions in currency markets by authorities here to curb the yen's plunge.
The U.S. Federal Reserve is among 10 major central banks that have been aggressively hiking their rates to combat inflation and will likely proceed with a 75 basis points increase at its policy meeting next week, marking the fourth-straight hike of that level.
The European Central Bank on Thursday announced its second straight 75 basis point rate hike to curb inflation, which surged almost 10 percent in September, as concerns mount over a global recession.
Data from the statistics bureau on Friday, meanwhile, showed inflation in Tokyo, a key barometer for future nationwide readings, rose 3.4 percent in October from a year ago, marking the sharpest increase in over 40 years.
The BOJ, however, despite the magnitude of current and future headwinds, maintained its ever-optimistic assessment that Japan's economy has "picked up" and is expected to continue recovering. ■