TOKYO—The Bank of Japan on Friday dialled back emergency pandemic funding but maintained an ultra-loose policy and extended financial relief for small firms, cementing expectations it will remain among the most dovish central banks for the foreseeable future. BOJ Governor Haruhiko Kuroda said borrowing costs will remain low in Japan even as other central banks hike interest rates, stressing the roll-back of emergency funding was in no way a prelude to a full-blown withdrawal of monetary stimulus. The BOJ’s decision, underpinned by cautious optimism that the economic damage wrought by coronavirus crisis is gradually healing, came hours after Britain became the first G7 economy to raise rates since the onset of the pandemic. The Federal Reserve and the European Central Bank also moved towards rolling back crisis-era stimulus, though at varying degrees reflecting their differing views—as well as uncertainty—on the surge in global inflation. Fears over the recent rapid spread …
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