Interest Rate in Japan
Japan - Interest Rate
Bank of Japan keeps its monetary policy steady in September
The Bank of Japan left its monetary policy stance unchanged at its 20–21 September meeting, as expected by market analysts. The Bank decided to continue with its stimulus program (officially known as the “Quantitative and Qualitative Monetary Easing with Yield Curve Control” framework) for as long as is necessary to achieve its 2.0% inflation target. The Bank’s board members voted 8 to 1 in favor of continuity. The newest Bank board member, Goushi Kataoka, dissented from Governor Haruhiko Kuroda and the other members, arguing in a dovish stance that more needs to be done to achieve the inflation target. The short-term policy rate applied to current account balances held by financial institutions at the Bank was left at minus 0.1%, 10-year bond yields were capped at around 0% and the pace of Japanese government bond purchases remained at JPY 80 trillion (USD 714 billion) annually.
The Bank of Japan, in continuing to pursue an accommodative monetary policy, is increasingly out of sync with its international peers. The U.S. Federal Reserve, for example, is tightening its own policy. Strong economic growth, high employment levels and a healthy external sector have not yet translated into inflation reaching its target in Japan; currently it stands at around 0.5%, with short-term inflation expectations also remaining weak. The Bank’s continued monetary policy stance should help lift inflation closer to target going forward.
Market analysts do not expect the Bank of Japan to change its accommodative monetary policy stance in the near future. Risks to the economic outlook for Japan include policy uncertainty from the United States; developments in emerging and commodity-exporting economies; and negotiations on the United Kingdom’s exit from the European Union, given that both are key Japanese trading partners; and geopolitical risks. The Bank’s next monetary policy meeting is scheduled for 30–31 October.
The analysts FocusEconomics polled this month expect the Bank of Japan’s short-term policy rate to end both this year and 2018 at minus 0.09%. The 10-year bond yield is expected to be 0.05% at the end of this year, before rising slightly to 0.09% in 2018.
FocusEconomics Consensus Forecast panelists expect the yen to trade at 113.3 per USD at the end of 2017. For 2018, the panel projects that the yen will trade at 112.2 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||0.07||-4.41 %||Oct 19|
|Exchange Rate||112.6||-0.35 %||Oct 19|
|Stock Market||21,449||0.40 %||Oct 19|
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October 19, 2017
Nominal exports valued in yen increased 14.1% from the same month last year in September, following August’s 18.1% rise.
October 11, 2017
Core machinery orders (a leading indicator of capital spending over a three- to six-month period) expanded for the second consecutive month in August, suggesting that businesses are ramping up investments in order to cope with healthy external and domestic demand.
October 3, 2017
Consumer sentiment edged up from 43.3 in August to 43.9 in September, marking a six-month high.
October 2, 2017
According to the Bank of Japan’s quarterly Tankan business survey, sentiment among large manufacturers jumped to the highest level in 10 years, suggesting that the economic recovery is broadening.
September 29, 2017
In August, the core consumer price index rose 0.1% from the previous month in seasonally-adjusted terms, up from the flat reading in the previous six months.