Photo/Illutration A display in Tokyo shows the Japanese currency trading at 156 yen against the dollar at one point on April 26. (Kohei Higashitani)

The Bank of Japan decided to maintain its current monetary policy after a two-day meeting on April 26, sending the Japanese currency to a fresh low in 34 years.

The central bank will continue to guide the uncollateralized overnight call rate--the rate commercial banks charge on loans to each other and the target for its money market operations--to a range of between 0.0 and 0.1 percent.

The BOJ decision spurred investors to sell the yen and buy the dollar on expectations that interest rate gaps between Japan and the United States are unlikely to narrow anytime soon.

The Japanese currency touched 156 yen against the dollar, its weakest level since 1990, during Tokyo foreign exchange trading on April 26.

Later in the day, BOJ Governor Kazuo Ueda told a news conference, “We concluded that the yen’s depreciation has not made a significant impact on the underlying inflation rate so far.”

He said the effects of a weak yen are generally short-lived, but added that the central bank will continue to carefully monitor the situation to see if a change in monetary policy is necessary to respond to the decline in the yen’s value.

The yen slipped further to 156.80 yen against the greenback during Ueda’s news conference because Ueda did not say anything definitively to warn against the currency’s weakening.

In March, the BOJ ended its negative interest rate policy and raised rates for the first time in 17 years in a historic shift from its ultra-loose monetary policy that was in place for 11 years.

Ueda has said the central bank will consider an additional hike if the probability of achieving its price stability target of 2 percent increases.

The Outlook for Economic Activity and Prices, the BOJ’s quarterly report released April 26, showed that the inflation rate is expected to be around 2 percent for five consecutive years through fiscal 2026.

The report said the consumer price index is expected to increase 1.9 percent in fiscal 2026, providing the BOJ’s first projection for the year that begins April 2026.

The latest report also revised up the forecasts for fiscal 2024 and fiscal 2025 to 2.8 percent and 1.9 percent, respectively, from the previous report.

Ueda told the news conference, “The virtuous cycle between wages and prices has continued to strengthen.”

But he declined to say when an additional interest rate hike is expected.

“We will make a comprehensive decision by carefully looking at various information,” Ueda said.

In recent weeks, investors have remained on edge over a possible foreign exchange market intervention to prop up the Japanese currency.

In September 2022, the Finance Ministry and the BOJ intervened in the market when the yen fell to 145.90 yen against the dollar, marking Japan’s first dollar-selling, yen-buying intervention in 24 years.

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