The Bank of Japan decided to retain the interest rate at 0.5 percent. It was expecting that bank of Japan would increase its benchmark bank rate, but bank emphasis to judge the economic strength before tightening policy.
Policy makers are in a favor of adopting an economy boosting policy to ensure consistent growth pace. Economists’ considers a possible hike in bank rate within a span of couple of month as Chief Cabinet Secretary Yasuhisa Shiozaki said
The Bank of Japan has exclusive jurisdiction over its financial policy which is based on a comprehensive decision
Quarterly report, which released couple of days before showed that Japanese economy grew at an annual pace of 3.3 percent for the January-March quarter, up from an earlier estimate of 2.4 percent. The nation’s unemployment rate has also declined to 3.8 percent in April, the lowest level in nine years. Consumer prices are falling continuously for last three months, raising concerns that Japan might be slipping back into deflation.
The core consumer price index decreases 0.1 percent in April, 0.3 percent in March and 0.1 percent in February, which was the first drop recorded in the last 10 months.
Continues decreasing value of product creates the problem for a major industrialized economy, especially one that otherwise has been steadily recovering from a decade-long stagnation in recent years on improved business investment and consumer spending. Therefore Japanese economy is experiencing the same trend and arise the worry to policy makers, to act accordingly on the problem.
It was expecting that bank of Japan would increase its bank rate, but some analysts expect the bank is facing political pressure to not increase interest rates until after parliamentary elections scheduled for July. The bank last changed the interest rate in February, doubling it from 0.25 percent. That was the first hike since July 2006, when the bank ended five years of keeping interest rates at near-zero, an unusual policy to spur the world’s second biggest economy out of a decade of stagnation.
Image: Theorientalcaravan
Via: IHT
