Bank of Japan to keep interest rates unchanged at 0.25 percent, aligning with expectations

(MENAFN) The Bank of Japan (BoJ) announced on Thursday that it would keep its benchmark interest rate unchanged at 0.25 percent, which remains the highest level since 2008. This decision was made by an 8-1 vote, with board member Naoki Tamura being the sole member to advocate for a 25-basis-point increase. The move came despite the United States implementing its third rate cut of the year, as the BoJ opted to hold off and assess potential risks in the market.

The central bank highlighted that Japan's economic outlook remains uncertain, with multiple factors contributing to the uncertainty. Risks associated with global economic trends, fluctuations in commodity prices, and domestic wage and price behavior continue to affect the country’s financial landscape. The BoJ stressed that it is closely monitoring these developments as part of its ongoing assessment of economic conditions.

Additionally, the BoJ pointed out that the shift in firms' behavior toward raising wages and prices has made exchange rate movements more influential on domestic prices. The bank noted that this shift increases the likelihood that changes in the exchange rate will impact inflation and other prices in Japan more than in the past.

In the wake of the BoJ's decision, the Japanese yen weakened by 0.3 percent against the US dollar, reaching a one-month low of 155 yen per dollar. This movement reflects the market's reaction to the bank's stance on interest rates and its cautious outlook.

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