Bank of Japan keeps interest rates steady in 8-1 vote
The Bank of Japan's (BoJ) two-day monetary policy meeting ended this Thursday with BoJ policymakers revealing that interest rates will remain steady for the time being.
Regarding the Japanese economy, the central bank board signalled a positive outlook toward reaching its desired 2% inflation target without adding more stimulus. The bank continued to reveal that its 10-year government bond yield target will remain around 0%.
While today's decision was expected, some were surprised to see board newcomer Goushi Kataoka dissent with the majority view during the interest rate vote. Mr. Kataoka said that existing monetary policy would not be enough to reach the 2% inflation target during 2019. The final vote was 8-1 in favour of keeping rates unmodified.
Reuters reported that "with inflation distant from his target, Governor Huruhiko Kuroda will likely reassure markets the BOJ will lag well behind its U.S. counterpart in scaling back its massive stimulus."
This followed the announcement from the U.S. Federal Reserve that the American central bank will begin reducing its quantitative easing programs in October, while the Federal Open Market Committee expects one more rate hike this year in December.
The projection boosted the U.S. dollar to a two-month high against the yen, up 0.2% at 112.430, touching 112.645 at one point. Furthermore, the greenback gained versus the euro after the Fed's heightened interest rate hike expectations, up 0.1% to $1.1886 after declining 0.8% the day before.