In contrast to the central banks of other developed countries, the Bank of Japan on Friday decided to maintain its dovish monetary policy, despite mounting pressure to act against the plunging value of the yen and rising inflation.
In its quarterly report, the central bank also revised its outlook for inflation for this fiscal year, which runs through March, raising it to 2.9% from 2.3% due to increasing import costs stemming from the decline of the yen against the dollar and soaring commodity prices.
The BOJ reiterated that its aggressive easing — which includes setting a short-term interest rate at minus 0.1% and purchasing Japanese government bonds to defend the ceiling of 0.25% for 10-year JGB yields — is necessary to support the recovery of the Japanese economy.