By Megumi Fujikawa
TOKYO--The Bank of Japan on Friday kept its ultra-easy policy in place, distancing itself from a global wave of monetary tightening because inflationary forces remain weak in Japan.
The bank maintained its target for short-term interest rates at minus 0.1% and its target for the 10-year Japanese government-bond yield at around zero.
The decision was a contrast to the Federal Reserve, which raised its policy rate on Wednesday to a range between 0.25% and 0.5%. It was the first U.S. rate increase since 2018. On Thursday, the Bank of England raised rates for the third consecutive meeting.
Last week, the European Central Bank also said it would phase out its bond-buying program by September, taking a key step toward rate increases later in the year.
Despite supply shortages and higher energy prices, Japan hasn't experienced substantial inflation so far. Consumer prices rose 0.6% in February from a year earlier, while prices excluding volatile fresh food and energy fell 1%. In the U.S., inflation rose 7.9% in February, hitting another four-decade high.
Japanese consumers are starting to witness some prices rise. Candy manufacturer Morinaga & Co. said Tuesday that it plans to raise prices of 50 items, including biscuits and candy, by 3% to 11%, starting May 31.
"The underlying inflationary pressure is projected to increase," the BOJ said in a statement. Consumer prices are expected to rise clearly into positive territory due to higher energy and raw material prices, it said.
The BOJ adopted a slightly weaker tone in its economic assessment. "Japan's economy has picked up as a trend," the bank said. Previously, the bank said a pickup in Japan's economy had become evident.
Write to Megumi Fujikawa at megumi.fujikawa@wsj.com
(END) Dow Jones Newswires
03-17-22 2327ET
