The Bank of Japan maintained its key short-term interest rate at -0.1% and that for 10-year bond yields around 0% during its September meeting, hours after the US delivered a 75bps rate hike, the third such rise in a row, and signaled more hikes would be delivered in future meetings. Policymakers mentioned that Japan’s economy is expected to be under downward pressure from high commodity prices due to the prolonged war in Ukraine. Still, the economy is likely to recover, as the impact of COVID and supply chain issues eases. On the price side, inflation has been in the range of 2.5 to 3%, as the yen hit its weakest level in more than 20 years. The BoJ said that it would continue to buy unlimited amounts of bonds to defend an implicit 0.25% cap every market day, as it has been doing since April. The board also decided to phase out a pandemic-relief loan scheme while expanding liquidity operation targeting a broader range of corporate funding needs.