The Bank of Japan (BoJ) has decided to keep its uncollateralized overnight call rate at approximately 0.25%, according to a statement released following today’s Monetary Policy Meeting. The decision was unanimously agreed upon by the Policy Board as part of the central bank’s ongoing strategy for money market operations.
In its statement, the BoJ noted that Japan’s economy continues to recover at a moderate pace, although certain sectors are still showing signs of weakness. The bank highlighted steady improvements in overseas economies, corporate profits, and business fixed investments, while Japan’s private consumption has also been increasing despite the pressure of rising prices.
However, the BoJ pointed to a sluggish performance in housing investment and flat public investments. The consumer price index (CPI) for all items excluding fresh food has increased within the range of 2.5% to 3.0% year-on-year, driven by wage increases and service price hikes. Inflation expectations have risen moderately, supported by ongoing consumer price trends.
The bank forecasted that Japan’s economy is likely to continue growing beyond its potential rate, as overseas economies expand and domestic spending intensifies. Additionally, the year-on-year CPI increase is expected to remain elevated through fiscal 2025, though the BoJ emphasized that factors such as government policies might curb inflation over time.
The statement also acknowledged significant uncertainties in the economic outlook, particularly concerning overseas economic activity, domestic wage behavior, and commodity prices. The BoJ stressed the need for careful monitoring of developments in foreign exchange and financial markets, particularly as wage increases continue to affect price trends.
