Despite inflation staying well above the Bank of Japan’s 2% target, financial markets are skeptical about whether the central bank will make any changes to its ultraeasy monetary policy at its upcoming meeting.
Given this prevailing view, a shift in Japan’s ultraloose policy could have wide-ranging repercussions, similar to when the central bank raised the 10-year yield cap to 0.5% in a surprise move in December to rectify market distortions.
BOJ Gov. Kazuo Ueda was recently quoted by the media as saying the country was still far from stably achieving the bank’s 2% inflation target, helping to reverse market trends triggered by growing speculation of a possible policy adjustment this month.
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