On March 20, 2023, the Bank of Japan (BOJ) head office is visible beyond the cherry blossoms in Tokyo.
Kazuhiro Nogi | AFP | Getty Images
The Bank of Japan kept its base interest rate unchanged at 0.25% on Thursday.
The decision came a day after the US Federal Reserve cut interest rates by 25 basis points, bringing the federal funds rate to 4.25-4.5%.
of circle After the interest rate decision, the currency traded 0.16% lower against the dollar at 155.06.
The Bank of Japan said in a statement that the decision to keep rates unchanged was divided 8-1, with Director Naoki Tamura advocating for a 25 basis point (bp) hike.
However, the central bank noted that “uncertainty surrounding Japan's economic activity and prices remains high.''
For this reason, he expressed the view that “it is necessary to pay sufficient attention'' to trends in financial and foreign exchange markets and their impact on Japan's economic activities and prices.
“Exchange rate movements are more likely to impact prices than in the past, especially as corporate behavior has shifted more towards raising wages and prices in recent years,” the bank added. .
The Bank of Japan's decision is in line with a CNBC poll that showed 13 out of 24 economists expect the Bank of Japan to keep its key interest rate unchanged in December, then raise it at its next meeting in January.
The survey was conducted Dec. 9-13, ahead of the Fed's indication that it would reduce its rate cuts in 2025.
Citi's Dec. 13 memo predicts that the Bank of Japan will raise interest rates three times in 2025, with a rate hike of 1%.
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