Bank of Japan Meeting: Pressure Mounts to Raise Interest Rates

BoJ’s Monetary Policy differs from other Central Bank:

The Japanese central bank, Bank of Japan’s (BoJ) Monetary Policy varies from other reference entities like US Federal Reserve and European Central Bank. On January 17, 2023 the markets anticipate rises in interest rates in the third world economy but analysts do not expect BoJ to modify its stimulus plan again at this meeting.

On December 20, BoJ decided to maintain its negative reference interest rates and its objective that 10-year bonds to fluctuate 0%, thus granting more room for the yield curve. As a result of this measure, Treasury bond prices rose and the divergence between the BoJ and other central banks caused the devaluation of Japanese yen against the dollar and euro in the past year.

The consumer price index in Japan increased 3.7% last November, its greatest increment in 41 years and is likely to end the year around 4%. Although, BoJ considers this inflation as of imported and temporary nature due to global increase in raw materials and energy cost.

BoJ Governor Haruhiko Kuroda denied that the bank’s adjustment is a preview of coming rate hikes and insisted that the domestic economy is not yet ready to assimilate a tightening of those rates. He expects that the bank will change its path by April when the term of current governor ends. EFE’s redistribution and redistribution of contents is strictly prohibited.

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