BOJ Remains Low Interest Rates, But Ueda Sends Caution
Bank of Japan (BOJ) Governor Kazuo Ueda emphasized on Monday that core inflation in Japan remains below its 2% target, prompting the central bank to maintain its accommodative monetary policy. This means ultra-low interest rates and liquidity support will remain in place for the time being to prevent the economic recovery from faltering.
However, Ueda also issued a subtle warning, saying that keeping policy too loose for too long could pose risks to efforts to achieve the 2% inflation target stably and sustainably. The BOJ, according to Ueda, is now seeking an interest rate level that will ensure a "smooth landing" for the Japanese economy—not so tight as to hurt growth, but not so loose as to trigger new imbalances.
In financial markets, Ueda's statement sent USD/JPY up slightly by about 0.15% to 154.80, reflecting the view that Japan will not quickly transition out of the ultra-low interest rate era. The question now is: will the BoJ begin to change its policy tone in the coming months, or will it instead remain in ultra-loose mode for longer while waiting for evidence of inflation truly "sticking" above 2%? (asd)
Source: Newsmaker.id
