Bank Of Japan Holds Key Rate As Expected
(RTTNews) - The Bank of Japan left its interest rate unchanged after hiking the rate by a quarter-point early this year, amid rising concerns about the US trade policies and its impact on economic activity and prices.
At a two-day meeting that ended on Wednesday, the policy board, governed by Kazuo Ueda, unanimously decided to maintain the uncollateralized overnight call rate at around 0.5 percent, which was the highest level since the global financial crisis in 2008.
The bank had raised the benchmark rate to the current level from 0.25 percent in January.
"Concerning risks to the outlook, there remain high uncertainties surrounding Japan's economic activity and prices, including the evolving situation regarding trade and other policies in each jurisdiction and developments in overseas economic activity and prices under such situation," the bank said.
With inflation remaining well above the 2 percent target and set to overshoot the forecasts and spring wage negotiations resulting in even larger pay hikes, there is a decent chance of a rate hike at the May meeting, Capital Economics economist Marcel Thieliant said.
The bank reiterated that the economy is likely to grow at a pace above its potential growth rate, with overseas economies continuing to grow moderately.
Rice prices are forecast to be at high levels through fiscal 2025, and this will push up inflation, the bank observed.
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