The Central Bank of Japan decided in its meeting that ended this morning, Wednesday, January 18th, to keep its monetary policy unchanged, by allowing the volatility of 10-year bond yields, minus or plus 0.50%. The bank is buying exchange-traded funds (ETFs) for 12 trillion yen and Japanese real estate investment J-REITs for 180 billion yen.

Since its meeting in December, the Bank of Japan has allowed the 10-year Japanese bond yields to rise to about 0.50%, compared to the previous limit of -0.25%, before keeping it at today’s meeting after expectations had indicated that it would be raised to 0.75% or canceled entirely.

In its quarterly forecast report for the Japanese economy, the bank lowered its growth forecasts, as the bank expects the Japanese economy to grow by about 1.7% this year, compared to 1.9% in October forecasts, and to 1.1% next year, compared to 1.1% in October estimates.

In turn, the bank expects inflation to rise to 1.6% this year, the same as the October estimates, and to rise to 1.8% this year, compared to 1.6% in the October estimates.

The yield on Japanese government bonds for ten years declined by more than 10 points after the announcement of the decision of the Central Bank of Japan, before settling in its trading above the bank’s target at 0.502%, while the Nikkei index rose by about 639 points before closing, and was trading at 26.773 levels.

The Japanese yen is declining against the US dollar to levels of 131.40, retreating by more than 300 points after announcing the statement, while the pound sterling rose against the yen by more than 2% points, as it traded at levels of 160.76.