Japan sticks to record-low rates, yield curve controls

ANKARA

The Bank of Japan (BoJ) on Wednesday decided to maintain its ultra-low interest rates and yield curve control targets.

The BoJ kept its key short-term interest rate unchanged at minus 0.1% and 10-year bond yields at around 0%.

Surprisingly, it also made no change to the new 0.5% cap for the 10-year government bond yield.

In an unexpected decision in December, the bank increased the range of 10-year Japanese government bond yield fluctuations to minus 0.5% and 0.5%, from minus 0.25% and 0.25%.

BoJ Governor Haruhiko Kuroda, however, was adamant that the step should not be viewed as a rate hike.

The move pushed up a slumping Japanese yen by more than 2% to 133 against the US dollar, its highest level in four months.

By Wednesday afternoon, the yen had dropped to around 131, and the 10-year yield decreased to 0.41%.

According to the latest data, Japan’s annual consumer inflation rate stood at 3.8% in November, the highest since January 1991, fueled by high global commodity prices and the weak yen.