The Bank of Japan (BoJ) maintained its key short-term interest rate at -0.1% and that of 10-year bond yields at around 0% in its September meeting by unanimous vote. The central bank also left unchanged an allowance band of 50bps set on either side of the yield target, as well as a cap of 1.0% adopted in July. The BoJ mentioned that it would patiently continue with monetary easing and respond to development in economic activity, the dynamics of prices, and financial conditions, amid extremely high uncertainties at home and abroad. By doing so, the board aims to achieve a price stability target of 2% in a sustainable manner, accompanied by wage increases. The committee reiterated it will take extra easing measures if needed while being aware of rising inflation expectations. In a recent interview with a local newspaper, Governor Kazuo Ueda hinted that an end to negative interest rates could come sooner than previously expected if supported by enough data on wage hikes.
