Bank of Japan (BOJ) Governor Haruhiko Kuroda at the central bank’s headquarters in Tokyo, Japan, Thursday, May 27, 2021.

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Japan’s outgoing central governor Haruhiko Kuroda defended the Bank of Japan’s ultra-dovish monetary policy stance at his final policy meeting on Friday.

The Bank of Japan left its negative rate unchanged at -0.1%, broadly in line with expectations ā€“ and reiterated the central bank’s aim to keep the yield on the 10-year Japanese government bond (JGB) around 0%.

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The central bank has kept its reference rate unchanged since 2016, when it implemented its yield curve control (YCC) policywhich is trying to defend its target on JGB by buying an unlimited number of government bonds.

Kuroda was first appointed in March 2013. His current five-year term ends on April 8 and will be replaced by incoming BOJ chief Kazuo Ueda. /want to mention Ueda out loud

Kuroda has led the central bank’s ultra-dovish monetary policy over the past decade — even as global central banks have raised interest rates in recent months in an effort to tame inflation.

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The BOJ shocked global markets in December when it widened its tolerance range to 50 basis points above and below its 0% target ā€“ up from 25 basis points previously.

On Friday, the yield on 10-year Japanese government bonds fell to 0.441%, below the upper ceiling of the central bank’s tolerance range of 50 basis points above and below 0%. The Japanese yen weakened about 0.3% after the announcement, trading at 136.6 against the US dollar.

“Japan’s economy, while affected by factors such as high commodity prices, has gained momentum as the resumption of economic activity has progressed,” the Bank of Japan said in its policy statement on Friday, concluding the two-day meeting.

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“Financial conditions have been satisfactory overall, although weakness in the financial position of companies has persisted in some segments,” the central bank said.

New BOJ management

Japan’s upper house of parliament approved Ueda to become the next central bank chief, Kyodo reported. This paves the way for the Japanese government to formally appoint Ueda after approval by the lower house on Thursday.

Parliament also approved Shinichi Uchida and Ryozo Himino as the next deputy governors of the Bank of Japan, Kyodo said.

The central bank held off on changes to its yield curve control policy and inflation target, saying it will aim “to achieve the price stability target of 2 percent, for as long as is necessary to maintain that target in a stable manner.”

The next head of the Bank of Japan is unlikely to change his predecessor's policies

The Bank of Japan “will continue to expand the monetary base until the year-on-year rate of increase in the observed CPI (all goods minus fresh food) exceeds 2 percent and remains above target in a stable manner.” It said in a statement.

Japan’s consumer price index rose 4.2% in January ā€“ the highest CPI reading in 41 years. The next report will be published on February 24.

However, the central bank ended its statement on an upbeat note, saying further growth lies ahead for the country’s economy.

“Japan’s economy is likely to recover, with the impact of covid-19 and supply-side constraints easing although it is expected to be under downward pressure stemming from high commodity prices and slowdowns in overseas economies,” the central bank said.

“Japan’s economy is expected to continue growing at a rate above its potential growth rate,” it said.