The Bank of Japan's policy board voted 7-2 to maintain its short-term interest rate at negative 0.1%, and to purchase Japanese government bonds in a bid to keep 10-year yields at around zero percent.
The widely expected move came hours after the U.S. Federal Reserve raised its benchmark interest rate for a fourth time in 2018. Bank of Japan Governor Haruhiko Kuroda has repeatedly ruled out the possibility of an interest rate increase in the near term as inflation in Japan remains below the central bank's target of 2%.
The Japanese economy is expanding moderately and is likely to continue to do so, the central bank said in its Dec. 20 monetary policy statement, though it warned of risks from U.S. macroeconomic policies and their potential impact on global financial markets, protectionist moves and negotiations surrounding Britain's exit from the European Union, among others.
The policymakers also voted unanimously to purchase exchange-traded funds and Japan real estate investment trusts to increase their amounts outstanding at annual paces of about ¥6 trillion and ¥90 billion, respectively. The central bank will maintain the amounts outstanding of commercial paper and corporate bonds at about ¥2.2 trillion and ¥3.2 trillion, respectively.
The central bank said it intends to maintain the current "extremely low levels" of short- and long-term interest rates for an extended period of time amid uncertainties regarding economic growth and the potential impact of a planned increase in the sales tax to 10% in October 2019 from 8% currently.
As of Dec. 19, US$1 was equivalent to ¥112.20.