The BoJ maintained short-term interest rates at -0.1% and kept yield curve control parameters unchanged after a two-day meeting, according to a statement released on Tuesday.
The Bank of Japan kept monetary policy steady and adjusted economic forecasts without providing clear guidance on a timetable for ending negative interest rates, pushing the yen lower.
The BoJ maintained short-term interest rates at -0.1% and kept yield curve control parameters unchanged after a two-day meeting, according to a statement released on Tuesday.
The bank lowered its inflation forecast for the April fiscal year to 2.4% from 2.8% in its quarterly outlook report. This implies that price increases will continue to exceed the 2% target for some time, as has been the case since April 2022. This political decision was unanimously expected by BoJ observers when interviewed by Bloomberg. A major earthquake on New Year’s Day and a deepening financial scandal within Prime Minister Fumio Kishida’s ruling party made this the wrong time for Japan’s first interest rate hike since then. since 2007. The Reserve and European Central Bank hinted at cutting interest rates later this year.
The yen weakened against the dollar immediately after the announcement, briefly reaching 148.55 per dollar, as market participants expected the rate to remain negative for some time.
The decision to hold is unlikely to change the widespread view among economists that the BoJ will raise interest rates at some point this year. The BOJ said the level of certainty in achieving the interest rate target continues to increase gradually, showing that the bank is increasingly confident in achieving the target and is still on track to raise interest rates.
Economists surveyed see April as the most favorable time to end negative interest rates, as this would give the central bank time to evaluate the results of annual wage negotiations. Higher increases are seen as key in ensuring a positive cycle of price and wage growth drives economic growth.
Ahead of Tuesday’s meeting, people familiar with the matter said BoJ officials believed their price forecast – of about 2% or more – was high enough to justify ending negative interest rates and now they are focusing on whether certainty about the outlook has increased. enough.
Gov. Kazuo Ueda will speak to reporters in the afternoon, possibly starting at 3:30 p.m.
The recent weakness in the yen will likely cause Ueda to avoid appearing too dovish. The yen around 150 is keeping import costs high and adding to inflationary pressures, raising the risk of another blow to already weak consumer spending.
Households facing rising living costs are growing impatient with widespread and prolonged monetary easing as the key price gauge remains above the BOJ’s 2% target.
For more information, visit at https://happenrecently.com/zepto/?amp=1
