Japan’s central bank maintains ultra-low rates

ISTANBUL

Amid interest rate hikes by major central banks globally, Japan’s central bank on Friday decided to maintain its ultra-low interest rates, at minus 0.1% for short-term and 0% for long-term.

The Bank of Japan will also continue to conduct fixed-rate purchase operations for consecutive days at 0.25%.

It will purchase exchange-traded funds worth 12 trillion yen ($89.6 billion) and Japan real estate investment trusts worth 180 billion yen.

"The Bank will purchase CP (commercial paper) and corporate bonds at about the same pace as prior to the novel coronavirus (COVID-19) pandemic, so that their amounts outstanding will gradually return to pre-pandemic levels, namely, about 2 trillion yen for CP and about 3 trillion yen for corporate bonds," it added.

The bank said that it will continue with Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control for the inflation target of 2%.

The country's annual inflation rate was 2.5% in April.

"The Bank will support financing, mainly of firms, and maintain stability in financial markets, and will not hesitate to take additional easing measures if necessary," it said.

While the Japanese yen has lost nearly 20% of its value against the US dollar since March, this week, the Japanese currency slumped to 135.6, the lowest level since August 1998.

Earlier this week, Japanese Finance Minister Shunichi Suzuki expressed concern on the yen's rapid decline and said the government would coordinate appropriate action with the central bank.