The Japanese central bank maintains negative interest rates

2023-12-19 11:42:52

Noha Makram – Live – The Bank of Japan maintained its ultra-loose monetary policy on Tuesday, in a widely expected move, with the bank preferring to wait for more evidence that wages and prices will rise enough to justify a shift away from its massive stimulus policy.

The central bank fixed short-term interest rates at -0.1% and 10-year government bond yields at 0%, and also maintained its pledge to enhance stimulus “without hesitation” if necessary.

The Japanese yen fell and Japanese stocks rose following the Central Bank of Japan’s decision to maintain its accommodative policy.

Moreover, there were no changes to the central bank’s accommodative guidance, dashing some traders’ hopes that the Japanese central bank would change its tone to signal a near end to negative interest rates.

Kazuo Ueda, Governor of the Bank of Japan, said that prices and wages appear to be moving in the right direction, with the labor union and major companies indicating the possibility of continuing to rise in wages next year, but he warned that uncertainty still mars the situation.

Ueda added that the possibility of inflation accelerating towards the target is gradually increasing, explaining that he still needs to ensure that the cycle of rising wages continues.

More than 80% of economists in a poll expected the Japanese Central Bank to end the negative interest rate policy next year, as some consider April to be the most appropriate time to end it, while others see a change in monetary policy in January.

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