By Megumi Fujikawa
TOKYO--The Bank of Japan kept its policy rates unchanged on Tuesday as it waits for more solid evidence of improving wage and price trends.
The Japanese central bank decided to maintain short-term interest rates at minus 0.1%. It said it will continue to set 1% as its reference point for the upper bound of the 10-year Japanese government bond yield. In October, the bank decided to make the 1% level a reference instead of a hard cap.
The bank's quarterly economic outlook released Tuesday forecast that inflation will stay near the bank's 2% target for the coming years.
The BOJ's policy board said it expects core consumer inflation excluding fresh food to reach 2.4% in the year ending March 2025, compared with a previous forecast of 2.8%. It expects core consumer prices to rise 1.8% in the following year ending March 2026.
Inflation has been running above the bank's 2% target since April 2022, and many analysts expect the central bank to scrap negative interest rates in the first part of 2024.
BOJ Gov. Kazuo Ueda has said, however, that he is still not fully confident that wage and price growth can be sustained at a healthy level after Japan experienced decades of flat or falling prices. Policymakers are now keeping a close eye on the results of annual wage negotiations in March to see whether companies will give larger pay increases than last year.
Write to Megumi Fujikawa at megumi.fujikawa@wsj.com
(END) Dow Jones Newswires
01-22-24 2240ET
