War and tariffs put the brakes on the Bank of Japan: rates unchanged at 0.50 per cent
Third consecutive session without a rise. International uncertainty weighed. Slowdown in tapering of government bond purchases announced
3' min read
3' min read
From our correspondent
NEW DELHI - Faced with the climate of high uncertainty generated by US trade policies and the outbreak of a new war front in the Middle East, the Bank of Japan (BoJ) announced Tuesday that it was keeping its benchmark interest rate unchanged at 0.50 per cent. The decision - which did not surprise investors - came at the end of two days of meetings of the committee that decides monetary policy.
"There are several risks. In particular, it is highly uncertain how trade and other policies will evolve in each jurisdiction and how economic activity and prices abroad will react to these policies," a BoJ statement read.
This is the third consecutive time that the Japanese central bank has decided not to change the cost of money. The last increase was in January.
The risk of rising inflationary pressures
."Given the global economic uncertainty and the geopolitical situation in the Middle East, I would say that at this stage the BoJ is in no hurry to continue normalising rates," explains Khoon Goh, Head of Asia Research for Anz in Singapore. "Our view," he continues, "is that the BoJ should proceed with normalisation because inflation seems stubbornly above the bank's 2% target. The weak yen is certainly one of the reasons for the upward pressure on inflation and, especially with the recent rise in oil prices due to geopolitical uncertainty, there will be further bullish risk in the near term, considering that Japan is a large importer of crude oil."
