The Bank of Japan, after clearly signaling last week's interest rate hike, may return to its accustomed fuzzy guidance about central bank policy to maintain flexibility when it eventually begins to consider how much tightening is enough.
The BOJ fumbled its communication in December, surprising investors when it left rates steady, but then telegraphed Friday's increase so unambiguously that markets had 90% priced it in and took the move in stride.
That shift to clearer guidance, an approach the U.S. Federal Reserve used in August to signal a policy shift, may prove temporary. Japanese policymakers fear being led by the markets and are unsure how far the BOJ can raise rates without cooling growth, say analysts and people familiar with the central bank's thinking.
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