Bank of Japan Maintains Ultra-Loose Monetary Policy, Yen Forecast Uncertain

The Bank of Japan has decided to maintain its ultra-loose monetary policy and keep interest rates unchanged, citing uncertainties in the domestic and global growth outlook. Despite core inflation exceeding the 2% target for 17 consecutive months, the central bank remains cautious about exiting the policy due to a lack of sustainable inflation and meaningful wage growth. The Bank of Japan had previously loosened its yield curve control in July, allowing longer-term rates to move more in line with rising inflation. Economists have brought forward their forecasts for a quicker exit from the ultra-loose policy to the first half of 2024.