In an indication that the circumstances are coming together to raise interest rates once more, the Bank of Japan kept its ultra-low interest rates on Thursday while stating that the dangers associated with the US economy were somewhat abating. The central bank emphasised its determination to continue raising borrowing costs if the economy maintains a mild recovery by projecting inflation to hover around its 2% objective in the upcoming years.
“Wages and prices are moving in accordance with our projections when we look at domestic data. At a press conference, Governor Kazuo Ueda stated, “We’re seeing clouds clear a bit regarding downside risks to the US and overseas economies.”
Ueda’s comments were less dovish than those he made prior to Thursday’s meeting, when he said the BOJ can “afford to spend time” examining the consequences of concerns including unstable financial markets and US economic uncertainty.
We don’t have a defined date for when the next rate hike will occur. When making policy decisions, we will carefully consider the information at hand at each policy meeting and revise our assessment of the state of the economy and prospects,” Ueda stated on Thursday.
At its two-day meeting, the BOJ maintained short-term interest rates at 0.25 percent, as was generally anticipated. This is the first time the BOJ has done so since an unresolved general election, which analysts believe will make efforts to normalise interest rates after years of ultra-easy policy more difficult.