The Bank of Japan has decided to maintain its benchmark interest rate at 1% this month, following a hike last month. However, it has indicated that further increases may be possible if inflation continues to rise.
According to reports from Reuters and the Nihon Keizai Shimbun, the Bank of Japan's monetary policy meeting, which took place over two days, resulted in a vote of 8-1 to keep the short-term policy rate at the current level.
Policy board member Hajime Takata argued for a 0.25 percentage point increase to 1.25%, citing the need to prepare for the possibility of inflation rising more than expected, but his proposal was not accepted.
The Bank of Japan reiterated its existing stance that it would consider further rate hikes if the economy and inflation develop as anticipated. Factors such as energy prices influenced by Middle Eastern tensions and fluctuations in the yen's value are expected to impact future rate decisions.
Last month, the Bank raised the benchmark rate from 0.75% to 1%, marking the highest level in 31 years due to increased inflationary pressures from rising energy prices. Market expectations leaned toward a rate hold at this meeting, given the recent hike. However, continued yen weakness could lead to higher import prices, potentially reigniting inflation and leaving the door open for additional rate increases.
A Reuters survey indicated that many market experts expect the Bank of Japan to raise the benchmark rate to 1.25% at least once more by the end of the year.
Bank of Japan Governor Kazuo Ueda is scheduled to hold a press conference this afternoon to explain the rate decision and outline future policy directions.
* This article has been translated by AI.
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