Bank Of Japan To Keep Ultra-low Rates

The Bank of Japan on Thursday maintained its massive stimulus programme and a pledge to keep interest rates ultra-low, reinforcing its resolve to support a fragile economy even as sharp rises in raw material costs push up inflation.

The central bank also said it will offer to buy unlimited amounts of 10-year government bonds to defend an implicit 0.25 percent cap around its zero target every market day, unless it becomes clear such an offer would draw no bids.

"The BOJ expects short- and long-term policy interest rates to remain at their present or lower levels," the bank said in a statement, leaving unchanged the guidance from the previous meeting in March.

The BOJ's commitment to its zero-rate programme puts it at odds with major economies that are shifting toward tighter monetary policy, although inflation in Japan is expected to creep up towards the central bank's two percent target.

Japan's economic growth likely stalled in the first quarter and is seen only rebounding modestly in April-June, as caution over the pandemic and rising living costs hurt consumption.

Core consumer inflation, which hit 0.8 percent in March, is set to accelerate to around two percent from April, though the rise will be driven largely by rising fuel costs and the dissipating effect of past cellphone fee cuts – rather than from higher wages, or underlying demand. (Reuters)