Bank of Japan maintains interest rates unchanged at 0.25 percent
Date
10/31/2024 8:49:34 AM
(MENAFN) On Thursday, the bank of Japan (BoJ) announced its decision to maintain the policy interest rate at 0.25 percent, according to an official statement. This move comes as the central bank continues to navigate the complexities of the Japanese economy, which the BoJ anticipates will sustain a growth rate exceeding its potential in the near future. By holding steady on interest rates, the BoJ aims to support ongoing economic activity while carefully managing inflation expectations.
The Bank of Japan projected that annual inflation will hover around 2.5 percent for the fiscal year 2024, with a gradual decline to approximately 2 percent for both fiscal 2025 and 2026. These forecasts indicate the bank's commitment to ensuring price stability while recognizing the evolving economic landscape. The expectation of a slight decrease in inflation rates over the next few years suggests a cautious approach to managing monetary policy, balancing growth with price stability.
However, the BoJ also highlighted significant risks that could impact its economic outlook. There are considerable uncertainties surrounding Japan's economic activities and inflation rates, which could be influenced by various external factors such as global economic developments, fluctuations in commodity prices, and domestic businesses' strategies regarding wage and price adjustments. These risks necessitate ongoing vigilance and adaptability from the central bank as it responds to changing economic conditions.
Historically, the BoJ has maintained a negative interest rate of minus 0.1 percent since 2015, but recent policy shifts have seen this rate gradually increase. In March, the bank raised the rate to 0.1 percent, followed by another increase to 0.25 percent in July, marking the highest level seen since the end of 2008. This evolution in monetary policy reflects the bank's efforts to adapt to changing economic dynamics while striving to support sustainable growth and inflation targets in Japan.
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