Japan’s stocks jump after BOJ keeps monetary policy unchanged in final meeting of 2023

Japan’s Nikkei 225 index jumped more than 1% Tuesday after the the Bank of Japan left its main policy rate unchanged at its final meeting of the year.

The BOJ made no change to its negative interest rate policy, holding the benchmark interest rate at -0.1%. The central bank also kept its stance on its yield curve control policy unchanged.

The central bank also warned of “high uncertainties” in Japan, saying that core inflation will stay above 2% throughout fiscal 2024.

The yen weakened 0.5% against the dollar to 143.50 after the decision. The Nikkei 225 gained 1.32% by late afternoon trading, while the Topix turned decidedly positive, last up 0.63%.

“We maintain our call that the BoJ will abolish the NIRP (negative interest rate policy) at the April meeting next year after confirming a robust spring wage settlement,” Shigeto Nagai, head of Japan Economics at Oxford Economics, wrote in a client note.

“After ending the NIRP, however, our inflation projection anticipates the BoJ maintaining an effective zero-interest rate policy for a few years.”

Separately, the Reserve Bank of Australia’ minutes revealed the Australian central bank deliberated on whether to raise rates by 25 basis points or leave them unchanged, with the board members eventually deciding to hold rates at 4.35%.

In Australia, the S&P/ASX 200 rose closed 0.84% at 7,489.10, resuming its climb after the index snapped a six-day winning streak on Monday.

South Korea’s Kospi was flat, while the small-cap Kosdaq gained 0.69% after hitting its highest level since Sept. 22 on Monday.

Hong Kong’s Hang Seng index fell 0.9%, while mainland China’s CSI 300 was flat.

Overnight in the U.S., the S&P 500 and the Nasdaq Composite advanced 0.45% and 0.61% respectively, while the Dow Jones Industrial Average was flat.

The S&P 500 is now 1.2% away from its all-time closing high at 4,796.56 that was reached in January 2022.

— CNBC’s Sarah Min and Hakyung Kim contributed to this report