Bank of Japan Maintains Interest Rate

Investing.com – The Bank of Japan (BoJ) has decided to keep its target for the uncollateralized overnight call rate at 0.25%. This decision was anticipated by 56% of analysts surveyed by Bloomberg, including Bank of America.

The policy board voted 8-1 in favor of maintaining the current rate during today's meeting. The dissenting vote came from board member Naoki Tamura, who proposed a 25 basis point increase, arguing that current economic conditions and price trends indicate a greater risk of price increases.

Despite the dissent, the BoJ's policy statement showed no significant changes. Their assessment of the current economic conditions, outlook, and risk factors remains largely the same as stated in the October Outlook Report.

At a press conference following the meeting, Governor Ueda adopted a dovish tone. When asked about the decision to maintain the rate despite recent domestic data aligning with the BoJ's expectations, Ueda cited two main reasons:

1. Information Gathering: He emphasized the need to gather more information regarding potential wage increases in the fiscal year 2025.
2. Overseas Economic Uncertainties: He pointed out ongoing uncertainties concerning the outlook for overseas economies, particularly the United States.

BofA economist Izumi Devalier noted that Ueda's comments suggest the central bank may need to wait until at least the March Monetary Policy Meeting (MPM) to gather sufficient information for a potential rate hike.

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