The Bank of Japan stands out from other central banks and keeps rates at a negative level.

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The Bank of Japan (BoJ) unanimously decided to keep the country’s interest rate at -0.1%, the same level it has maintained since January 2016, when it entered negative territory for the first time in history.

As a result, the Bank of Japan’s monetary policy board has distanced itself from other major central banks, which have embarked on a path of tightening monetary policy this year to try to curb inflation.

The move comes after the US Federal Reserve raised interest rates by 75 basis points for a third straight time on Wednesday and signaled further hikes, underscoring its determination not to let up in the fight against inflation.

The situation in Japan is different from that of Western economies. In August, inflation in Japan came in at 3%, the highest in eight years, but below the 9.1% registered in the Eurozone, 8.3% in the US or 9.9% in the United Kingdom.

The divergence in monetary policy has pushed the yen to a 24-year low and above a contraction above 145 per dollar, highlighting the dilemma Tokyo faces in trying to prop up a fragile economy with ultra-low rates without precipitating an unwanted yen decline. Import costs.

Shortly after the decision, a senior Japanese currency official said authorities would not tolerate further fluctuations in the yen. The warning came a week after currency leaders strongly signaled they would intervene in markets if necessary.

The unanimous decision followed a board reshuffle in July that included two new members, one replacing a monetary easing advocate who had consistently disagreed with keeping monetary policy unchanged. The number of votes suggests that the two members are unlikely to fight over monetary policy decisions this time.

The central bank decided to scrap the pandemic relief loan scheme and instead to expand liquidity operations targeting a wider range of corporate finance needs.

“The Bank of Japan expects short-term and long-term interest rates to remain at or below current levels,” the central bank said in a statement announcing the rate decision without changing its outlook.

Economic policy chief Masato Kanda said after the Bank of Japan’s announcement that officials would intervene in markets to support the yen. “There are cases where we can intervene,” Kanda told reporters. “We have not yet intervened, but we are ready to act at any time.”

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