Bank of Japan Keeps Interest Rates Steady, Cites Moderate Economic Recovery

New Delhi: The Bank of Japan (BoJ) has decided to maintain its short-term interest rates, pointing to a moderate recovery in the country’s economy while warning of "high uncertainties" in the outlook for future growth and inflation.In a widely anticipated move on Friday, the BoJ announced that its two-day monetary policy meeting ended with a unanimous decision to keep the overnight call rate target unchanged at 0.25 per cent. The central bank had raised this rate to 0.25 per cent in July. This has marked a significant shift from its decade-long policy of negative interest rates aimed at boosting inflation.In its official statement, the BoJ said Japan’s economy is expected to continue growing at a pace above its potential, driven by an increase in spending as incomes rise. BoJ Governor Kazuo Ueda, speaking at a press conference, said that consumption and other economic indicators suggest the economy is progressing as the central bank had forecast.“Japan's economy seems to be moving in line with our expectations,” Ueda said. He also reaffirmed that the BoJ is ready to raise rates further if inflation stays on course to consistently meet the 2 per cent target, as the bank currently projects.

Japan's economy grew at an annualized rate of 2.9 per cent between April and June, while real wages increased for two consecutive months in July, easing concerns about the impact of rising living costs on consumer spending.The BoJ acknowledged in its statement that, despite the overall recovery, some weaknesses remain in parts of the economy. Governor Ueda emphasized last month that the bank would continue to raise interest rates if both economic growth and inflation align with the central bank’s projections.( With Reuters Inputs)