BOJ Keeps Short-Term Interest Rate at -0.1%
Japan's central bank, the Bank of Japan (BOJ), has decided to maintain its large-scale monetary easing policy with a 'negative interest rate.'
On the 23rd, Kyodo News and NHK reported that the BOJ made this decision at its Monetary Policy Meeting. The short-term interest rate will be kept at -0.1%, and the policy to guide the 10-year government bond yield, a long-term interest rate indicator, to around 0% will be maintained.
Although the recent inflation rate has exceeded the BOJ's target of 2%, it was judged that it has not risen to a sustained upward trend accompanied by wage increases. The BOJ has set two conditions for ending the negative interest rate: maintaining a continuous inflation rate of 2% and achieving a virtuous cycle of wage and price increases. Last year, Japan's consumer prices rose by 3.1%, marking the largest increase in 41 years since 1982.
Experts expect the BOJ to continue its large-scale monetary easing policy at this meeting, considering factors such as the Noto Peninsula earthquake and spring wage negotiations. It is anticipated that the negative interest rate will be lifted after confirming the trend of wage negotiations in April, when the spring wage negotiations (Chuntu) conclude.
Meanwhile, the BOJ has revised its consumer price inflation forecast for the 2024 fiscal year (April 2024 to March 2025) downward from 2.8% to 2.4%, and slightly raised the inflation forecast for the 2025 fiscal year (April 2025 to March 2026) from 1.7% to 1.8%. The inflation forecast for the 2023 fiscal year (April 2023 to March 2024) remains at 2.8%.
Additionally, the real gross domestic product (GDP) growth rate forecast for 2023 was lowered from 2.0% to 1.8%. The forecast for 2024 was raised from 1.0% to 1.2%, while the forecast for 2025 remains at 1.0%.
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