Bank of Japan is Expected to Stand Pat on Wednesday
The Bank of Japan will announce its rate decision on Wednesday. The BoJ is expected to maintain its massive stimulus program and refrain from making any big change to its policy framework for the time being, as inflation remain far from the Bank of Japan’s 2% target. Under a yield curve control policy adopted in 2016, the Japan’s central bank now guides short-term interest rates at -0.1% and the 10-year government bond yield around 0%.
Analysts do not expect the central bank to take extra action to support the economy when the consumption tax is increased to 10% next year. Most of them expect the central bank to have tightened policy within a year of the tax rate going up in October.
Some economists also see the Bank of Japan raising its negative rate by the end of 2020. The central bank uses the rate on some commercial bank balances held at the BoJ to control short-term rates.