Bank Of Japan Leaves Rates Unchanged As Expected
Samantha LuanThe Bank of Japan left interest rates unchanged on Thursday, meeting market expectations for a hold as the central bank grapples with increased economic uncertainty and a looser fiscal outlook.
The Bank of Japan left interest rates unchanged on Thursday, meeting market expectations for a hold as the central bank grapples with increased economic uncertainty and a looser fiscal outlook.The BOJ left its benchmark rate at 0.5%, having last hiked the rate in January this year. Thursday's decision was in a 7-2 majority vote, with board members Takata Hajime and Tamura Naoki both keeping up their calls for a rate hike.
The two argued that increased inflation risks called for a policy rate that was a "little closer" to the neutral rate, and that the BOJ raise its benchmark by 25 basis points to 0.75%.Thursday's decision comes after data last week showed an uptick in Japanese consumer inflation, with core inflation remaining well above the BOJ's 2% annual target. This trend is largely expected to keep the BOJ biased towards more rate hikes in the coming months.
But the BOJ is expected to face political resistance towards more monetary tightening, especially after the election of Liberal Democratic Party leader Sanae Takaichi as prime minister.Takaichi is regarded as a fiscal dove, and is expected to ramp up government spending and stimulus measures. She is also expected to call for looser monetary conditions to support what she sees as a fragile Japanese economy.
