Despite a global trend of hiking rates, Japan’s central bank on Thursday decided to maintain its ultra-low interest rates, at minus 0.1% for short-term and 0% for long-term.
The Bank of Japan (BOJ) will also continue to conduct fixed-rate purchase operations for consecutive days at 0.25%.
In terms of monetary policies, the bank differentiates from other developed countries’ banks despite the current inflationary environment across the world.
“Japan’s economy is likely to recover toward the middle of the projection period, with the impact of the pandemic and supply-side constraints waning,” the bank said in a statement.
Although the economy was expected to be under downward pressure stemming from a rise in commodity prices due to the Russia-Ukraine war, “Japan’s economy is projected to continue growing at a pace above its potential growth rate,” the statement noted.
The bank lowered its 2022 growth forecast to 2.4% from April’s projection of 2.9% due to factors such as a slowdown in overseas economies and global supply-side constraints.
It also increased its 2022 inflation forecast to 2.3% from 1.9%, saying fluctuations in international commodity prices have been significant and that will spread to import prices and domestic prices.
The BOJ reiterated that it will not hesitate to take extra easing measures if necessary, saying it will support financing, mainly of firms, and maintain stability in financial markets.
It also expected short- and long-term policy interest rates to remain at their present or lower levels.
Source: Anadolu Agency