BoJ prefers to refrain from more easing ahead of Brexit referendum

The Bank of Japan announced after its monetary policy on Thursday that it would refrain from policy easing despite a strengthening yen and low inflation. The Japanese central bank indicated that it preferred to wait until after the results of a British referendum next week that could roil global markets.

Economists have expected the BoJ to take additional action in recent months, particularly given that BoJ Governor Haruhiko Kuroda has repeatedly vowed to take action “without hesitation” if the central bank’s 2% inflation target is in danger. The BoJ central bank also stood pat in April, when expectations for action were high.

Some BoJ policy board members, though, signaled ahead of this week’s meeting that they preferred to wait until after the U.K. votes next week on whether to leave the European Union, according to people familiar with the central bank’s thinking.

A weaker yen, largely the result of the BoJ’s monetary easing, had been a key element of Abenomics. Its decline helped push corporate profits to record levels, but global market turmoil resulted in a partial rebound this year. Brexit fears have pushed the yen sharply higher in recent weeks. The yen is considered a haven asset in times of turmoil.

The yen extended gains against the U.S. dollar shortly after the BoJ’s decision, trading at 104.50, a 21-month high and the strongest level against the euro since January 2013.

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