Mubasher: The Bank of Japan (BoJ) retained its monetary policy unchanged on Thursday, signalling possible monetary easing action at its next meeting due to the risk of losing momentum towards the inflationary target, according to the Wall Street Journal (WSJ).

The BoJ decided to keep its short-term deposit rate at -0.1% and its target for 10-year government bond yields close to zero, pledging again to maintain ultra-low rates at least through spring 2020.

The central bank said it would take a closer look during its two-day meeting on 30 and 31 October, citing “downside risks” on the rise.

Japan’s inflation has been below 1% recently, far from the 2% target, prompting the central bank to closely monitor “the possibility that momentum toward achieving the price stability target will be lost.”

The BoJ’s decision came amid a tendency among world’s major central banks to relax monetary policy.

In the US, the Federal Reserve on Wednesday decided to reduce its interest rates for the second time in a row this year. Last week, the European Central Bank (ECB) slashed its interest rate target to -0.5%, re-launching its bond purchase programme, known as the quantitative easing (QE).

The Japanese yen (JPY) advanced against the US dollar close to JPY 107.80.

By 7:41 am GMT, the USD/JPY pair fell by 0.35% to JPY 108.07.