BOJ Holds Rates as Unstable Politics Raises Uncertainties
The Bank of Japan kept its benchmark interest rate unchanged after uncertainties increased over the outlook for the economy and the stability of the government after the ruling coalition suffered its worst electoral result since 2009.
Governor Kazuo Ueda and his fellow board members maintained the unsecured overnight call rate at around 0.25%, according to its statement Thursday. The result was expected by all but one of 53 economists surveyed by Bloomberg.
The worst election outcome in 15 years for the ruling Liberal Democratic Party saps its power to determine economic measures and nimbly coordinate with the BOJ. The US presidential vote also looms large next week, leaving investors on guard for potential volatility in markets.
The central bank said it needs to pay attention to the course of overseas economies and the US economy in particular.
While the central bank reiterated its intention to raise rates when its inflation outlook is realized, it also cited the high level of uncertainties ahead.
The global market meltdown in August that followed the BOJ’s rate hike in July may be another factor that gave the bank reason to favor a cautious stance for now. The BOJ encountered criticism for helping trigger the slump in stocks by not sufficiently signaling its intention to raise rates ahead of time.
Source : Bloomberg
