Bank of Japan indicates preparedness to raise interest rate aligned with inflation outlook
Date
9/24/2024 9:46:49 AM
(MENAFN) The bank of Japan (BoJ) is signaling its preparedness to raise its policy interest rate if underlying inflation trends align with the bank's expectations. During a recent meeting with business leaders in Osaka, Governor Kazuo Ueda noted that with underlying inflation hovering around 2 percent, there is a diminishing need for additional monetary stimulus. This statement underscores a shift in the BoJ's approach as it adapts to evolving economic conditions.
Ueda emphasized the importance of aligning the policy interest rate with a neutral level that supports economic activity and prices. He pointed out that as inflation approaches target levels, the central bank may begin to consider adjustments that reflect these economic realities. The governor's comments indicate a willingness to transition from an ultra-loose monetary policy toward a more normalized stance if conditions warrant such a move.
Despite significant interest rate hikes from other major banks in response to post-pandemic economic recovery, the BoJ has maintained a more cautious stance. The central bank has kept interest rates at minus 0.1 percent since 2015, only recently increasing them to 0.1 percent in March and 0.25 percent in July. These adjustments mark the highest levels seen since late 2008, reflecting the BoJ's measured response to inflationary pressures.
Ueda also acknowledged the inherent uncertainties affecting economic conditions, cautioning that unexpected developments could influence policy decisions. He emphasized that actual policy implementation should be conducted in a timely and appropriate manner, taking various uncertainties into account. This careful navigation of economic signals highlights the BoJ's ongoing assessment of inflation dynamics and its commitment to maintaining stability in Japan's economy.
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