Bank of Japan Maintains Negative Interest Rate Amid Inflation Concerns

Despite inflation exceeding the 2% target, the central bank remains cautious about raising rates as wage increases lag behind rising prices.

• The Bank of Japan (BOJ) has maintained its negative interest rate policy, with a benchmark rate of negative 0.1%, aimed at encouraging banks to lend more and businesses and consumers to borrow more to spur the economy.
• Despite inflation rising above the BOJ's 2% target, the central bank is cautious about raising rates due to wage increases lagging behind rising prices and uncertainty about whether the target level of inflation can be sustained.
• The BOJ is closely monitoring price and wage trends before considering any changes to its interest rate policy.
• The Japanese yen has strengthened against the dollar for three consecutive days ahead of the BOJ's decision.
• Analysts believe the BOJ is slowly moving towards a shift in policy due to price increases, but the bank has stated it will not rush to exit its current stance of 'quantitative easing'.

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