Interest Rate in Japan
Japan - Interest Rate
BoJ keeps policy on hold, paints a rosier picture
The Bank of Japan (BoJ) maintained its monetary policy stance at its 15–16 June 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, which was in line with market expectations. The only two dissenters, who are in favor of a gradual normalization, will step down in July, leaving Governor Haruhiko Kuroda with a monochrome board. The interest rate applied to policy-rate balances in current accounts held by financial institutions at the Bank was left at minus 0.1%, 10-year bond yields were capped at around 0%, while the pace of asset purchases remained at JPY 80 trillion (USD 727 billion) annually.
The result of June’s meeting confirms that Japan is still far away from unwinding its long-lasting monetary stimulus, as inflationary pressures remain weak and achieving the 2.0% target is still nothing more than a mirage. The Bank slightly upgraded its view of the economy this month, stating that “private consumption has increased its resilience”. This compares with April’s assessment that consumer spending was merely “resilient”. Although a tightening labor market and a healthy external sector are propping up the economy, for now these dynamics are not translating into a sustained increase in wage growth, which would help drive inflation higher.
Adding to voices to maintain the current monetary policy stance, International Monetary Fund Deputy Managing Director David Lipton stated that it was premature for the BoJ to discuss an exit strategy and that authorities should continue implementing their accommodative fiscal and monetary policies. Moreover, the IMF official urged the government to push ahead with structural reforms in a context of resilient economic growth. The next meeting is scheduled for 19–20 July.
The analysts FocusEconomics polled this month expect the BoJ’s short-term policy rate to end this year at minus 0.10%, and also see it ending 2018 at minus 0.10%. 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 115.8 per USD at the end of 2017. For 2018, the panel projects that the yen will trade at 115.8 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||1.82 %||Jun 16|
|Exchange Rate||110.9||-0.06 %||Jun 16|
|Stock Market||19,943||0.56 %||Jun 16|
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June 23, 2017
The Nikkei Flash Manufacturing Purchasing Managers’ Index (PMI) fell from May’s revised 53.1 (previously reported: 52.0) to 52.0 in June.
June 19, 2017
Nominal exports valued in yen increased 14.9% from the same month last year in May, following April’s 7.5% increase.
June 16, 2017
The Bank of Japan (BoJ) maintained its monetary policy stance at its 15–16 June 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.
June 12, 2017
Core machinery orders (a leading indicator of capital spending over a three- to six-month period) declined for the first time in three months in April, casting doubts on the robustness of firms’ capital spending.
June 8, 2017
The Japanese economy expanded at a weaker rate than previously reported in Q1, as private consumption growth was slower than in the initial estimate and inventories recorded a sizeable drop, according to revised data released on 8 June.