The Bank of Japan has held off on raising its interest rates, sending the yen lower against the dollar as investors hunted for clues on the timing of its next major policy change.
The Japanese central bank’s decision at its final meeting of 2023 came after the US Federal Reserve surprised markets last week by signalling that it would cut interest rates next year. That prompted warnings from the European Central Bank and the Bank of England that it was too soon for them to let down their guard against high inflation. The BoJ, struggling to exit decades of deflation, is the only major central bank to maintain interest rates below zero.
The BoJ on Tuesday kept overnight interest rates at minus 0.1 per cent. It also made no change to its yield curve controls, after it revised the policy in October to allow yields on 10-year Japanese government bonds to rise above 1 per cent.