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Japan's central bank holds policy steady, but says it would ease to meet inflation goal

Key Points
  • The central bank of Japan said in its policy statement that it would ease "without hesitation" if the economy loses momentum for achieving the 2% inflation target.
  • The Bank of Japan on Tuesday maintained its short-term interest rate target at -0.1% and a pledge to guide 10-year government bond yields around 0%.
A security guard stands at the entrance of Bank of Japan headquarters in Tokyo.
Yuriko Nakao | Reuters

The Bank of Japan kept its monetary settings steady on Tuesday but added language to its policy statement that it would ease "without hesitation" if the economy loses momentum for achieving the central bank's 2% inflation target.

As expected, the BOJ maintained its short-term interest rate target at -0.1% and a pledge to guide 10-year government bond yields around 0%.

The BOJ also kept intact its forward guidance — or a pledge central banks make on future monetary policy — that commits to keeping current ultra-low interest rates "for an extended period of time, at least through around spring 2020."

The decision on maintaining its interest rate targets was made by a 7-2 vote, with board members Goushi Kataoka and Yutaka Harada dissenting. BOJ Governor Haruhiko Kuroda will hold a news conference at 3:30 p.m. (0630 GMT) to explain the decision.

In a quarterly review of its long-term projections, the BOJ cut its inflation forecast for the current fiscal year ending in March 2020 to 1.0% from 1.1% previously.