The policy board of the Bank of Japan on Tuesday voted unanimously to abstain from announcing more stimulus after boosting its asset purchases last month to fight deflation and support the economic recovery.
The board also decided to retain the key uncollateralized overnight call rate steady at 0-0.1 percent. The bank noted that the economy is shifting towards a "pick-up phase." The size of the asset purchase and credit facility was also left unchanged. Following the announcement, the yen extended its rally against other major currencies in early Asian deals on Wednesday. Yen was worth 79.62 against the dollar and 100.96 against the euro after the decision.
In April, BoJ boosted the purchase of Japanese Government Bonds by JPY 10 trillion, taking the size of the asset purchases authorization, excluding the credit facility, to JPY 40 trillion by end-2013. At the same time, the total size of the credit facility was reduced to JPY 30 trillion last month.
The central bank reiterated that the Japanese economy is expected to return to a moderate recovery path supported by a recovery in overseas economies and reconstruction-related demand at home.
The bank said the annual rate of change in the CPI is expected to remain at around zero for the time being. This was slightly different from the bank's statement last month that "it will likely be not too long before the rate reaches the Bank's "price stability goal in the medium to long term of 1 percent.
The risks faced by Japan's economy included the high degree of uncertainty about the global economy, the momentum towards the recovery for the U.S. economy, and the challenge faced by the emerging and commodity-exporting economies of achieving price stability and economic growth simultaneously.
The policy board noted that it will pay close attention to the developments in global financial markets, especially in the backdrop of the nervousness seen recently, mainly due to concern about the European debt problem.
On Tuesday, Fitch Ratings downgraded Japan's long-term foreign and local currency Issuer Default Ratings to 'A+' with a 'negative' outlook, citing rising risks to the sovereign credit profile due to higher public debt ratios.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.