Bank of Japan raises benchmark interest rate for 1st time in 17 years

20 Mar '24

2 min read

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The Bank of Japan recently raised its benchmark interest rate for the first time in 17 years.
The lending rate for overnight borrowing was raised to 0-0.1 per cent from minus 0.1 per cent.
Monetary policy will remain easy for some time, bank governor Kazuo Ueda emphasised.
Wages and profits at companies are improving, while Industrial production is stagnant.

The Bank of Japan recently raised its benchmark interest rate for the first time in 17 years. It raised its lending rate for overnight borrowing to 0-0.1 per cent from minus 0.1 per cent at a policy meeting.

“We made the decision because we foresaw stable and continuous 2 per cent inflation [the bank’s target],” the central bank’s governor Kazuo Ueda was quoted as saying by global newswires.

Monetary policy will remain easy for some time, he emphasised. He did not foresee any drastic rises in rates by private sector banks and other financial institutions, which will make their own decisions.

The negative interest rate policy, combined with other measures to inject money into the economy and keep borrowing costs low, ‘have fulfilled their roles’, he said.

Wages and profits at companies are improving, the central bank noted in a release.

The bank said the current recovery was based partly on a ‘materialisation of pent-up demand’ amid weakening global demand.

Industrial production was, however, observed to be stagnant. Housing investment was relatively weak and government spending was ‘more or less flat’. Ueda termed the situation ‘less than perfect’.

“Concerning risks to the outlook, there are extremely high uncertainties surrounding Japan’s economic activity and prices,” the central bank added.

Fibre2Fashion News Desk (DS)

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