Alexa
  • Directory of Taiwan

BOJ remains cautious about rate hike

BOJ remains cautious about rate hike

Bank of Japan Governor Toshihiko Fukui yesterday forecast the Japanese economy will stay on the right track next year but signalled caution on any swift rise in super-low interest rates.
"The Japanese economy is forecast to maintain sustained economic growth through the next fiscal year, while gains in consumer price rates will widen," Fukui said in a speech in Tokyo before top business leaders.
Last week, the government predicted 2.0 percent growth in the year to March 2008 in real terms, the sixth straight year of expansion and a notch above the revised-down 1.9 percent estimated for the current year.
"Concerning the perspective for the management of monetary policies, we will maintain easy monetary policies with extremely low interest rate levels for the time being," Fukui said.
"While doing so, it is necessary to adjust interest rate levels in line with a change in the economy and consumer prices," he said.
"However, we don't have in mind any certain levels of policy interest rates or any timing for a change," he said. "We want to make a decision seen to be the best for the Japanese economy."
The market is braced for a rate hike in early 2007 after a series of hawkish remarks from the central bank chief, who has warned of the risks of leaving borrowing costs at their current levels for too long.
But the market has increasingly bet against a rate hike in January after the Bank of Japan unanimously kept the benchmark cost of borrowing at 0.25 percent last week and acknowledged recent soft data.
"It is true that consumer prices recently showed some weak figures," Fukui said. "The Bank of Japan will closely watching various kinds of information."
The Bank of Japan raised interest rates to the current point in July when it ended its unorthodox five-year policy of keeping borrowing costs at effectively zero in a bid to stimulate the economy.
While the Bank of Japan is independent, many government officials believe the central bank should not yet raise interest rates further.
The Organization for Economic Cooperation and Development has also asked the Bank of Japan to hold off on raising rates, saying the world's second largest economy has not fully defeated its nearly decade-old scourge of deflation.
In the speech, Fukui also said a U.S. slowdown could weigh on the Japanese economy next year.
"The future for the U.S. economy can be raised as a risk," Fukui said.
"The pace of growth is slowing down in the United States. It is necessary to be be on alert," he said.


Updated : 2021-05-08 12:05 GMT+08:00