The Bank of Japan (BoJ) announced Tuesday that it will keep its monetary policy unchanged in November, leaving the short-term interest rate target at negative 0.1%.
The central bank, however, decided to introduce more flexibility to its monetary policy framework, opting to set 1.0% as the new reference point for 10-year Japanese government bond yields.
According to the BoJ's quarterly outlook report, Japan's economy is expected to continue a moderate recovery. While the risks to the price outlook are skewed toward the upside, the report underscores the need to closely monitor the positive wage inflation cycle. It also acknowledges that inflation expectations are gradually increasing and that, despite heightened uncertainty, a gradual acceleration in trend inflation is expected to move toward the board's price target.
