Interest Rate in Japan
Japan - Interest Rate
BoJ keeps policy unchanged despite Fed rate hike
The Bank of Japan (BoJ) maintained its monetary policy stance at its 15–16 March meeting, voting to continue with its Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control program as long as is necessary to achieve and maintain its 2.0% inflation target. The Bank voted 7–2 to leave the existing policy in place despite the recent rate hike by the United States Federal Reserve. While the BoJ’s decision was in line with market expectations, it also highlighted the diverging monetary policy trends among major central banks.
Although inflation is gradually resurfacing in the country on the back of higher energy prices, the Bank stated that, “inflation expectations have remained in a weakening phase.” Moreover, although the economy expanded for the fourth consecutive quarter in Q4, growth remains relatively meager and is mostly supported by a pick-up in global trade and a weak yen. Private consumption, the cornerstone of Prime Minister Shinzo Abe’s strategy to boost economic growth, remains sluggish as wage growth has stayed lackluster despite a tighter labor market.
Analysts do not believe that the BoJ will change its monetary stance anytime soon as risks are looming on the horizon. Uncertainty about Donald Trump’s trade policy is casting a long shadow on Japan’s all-important external sector, while the possibility of a faster tightening by the Federal Reserve has the potential to heighten volatility in the financial and foreign exchange markets. An abrupt slowdown in China and the consequences of Brexit are also key concerns. The BoJ’s next monetary policy meeting is scheduled for 26–27 April.
The analysts FocusEconomics polled this month expect the BoJ short-term policy rate to end this year at minus 0.11%, and also see it ending 2018 at minus 0.11%. The 10-year bond yield is expected to be 0.06% by the end of this year, before rising to 0.10% in 2018.
FocusEconomics Consensus Forecast panelists expect the yen to trade at 117.9 per USD at the end of 2017. For 2018, the panel projects the yen to strengthen marginally to 116.9 per USD.
Japan - Interest Rate Data
|Policy Interest Rate (%)||0.10||0.10||0.10||0.10||0.10|
5 years of economic forecasts for more than 30 economic indicators.
Japan Interest Rate Chart
Source: Bank of Japan.
|Bond Yield||0.06||-3.08 %||Apr 06|
|Exchange Rate||110.8||0.10 %||Apr 06|
|Stock Market||18,597||-1.40 %||Apr 06|
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April 21, 2017
Nominal exports in Japan valued in yen increased 12.0% from the same month last year in March, following February’s 11.3% increase.
April 21, 2017
The Nikkei Flash Manufacturing Purchasing Managers’ Index (PMI) rose from March’s revised 52.4 (previously reported: 52.6) to 52.8 in April.
April 6, 2017
Consumer sentiment rose from 43.2 in February to 43.9 in March, hitting the highest level since September 2013.
April 3, 2017
According to the Bank of Japan’s quarterly Tankan business survey, sentiment among large manufacturers jumped to the highest level in over a year on the back of a weakening yen and rising global demand.
March 31, 2017
Industrial production in Japan rose 2.0% in February compared to the previous month in seasonally-adjusted terms, contrasting January’s 0.4% decrease.