ECONOMY

Bank of Japan leaves policy unchanged after Fed rate cut

The Bank of Japan warned of headwinds in its latest statement. (File photo: Reuters)

The Bank of Japan (BoJ) on Thursday warned of increasing downside risks for the global economy but held off on further easing, even as European and US peers loosen their credit grip.

After a two-day meeting, the central bank said it would maintain its ultra-loose monetary policy, vowing to keep interest rates low at least until the spring of 2020.

But it warned of headwinds including the prolonged trade war between the US and China and Britain possibly leaving the European Union without a divorce deal.

“Given that, recently, slowdowns in overseas economies have continued to be observed and their downside risks seem to be increasing, the Bank judges that it is becoming necessary to pay closer attention to the possibility that the momentum toward achieving the price stability target will be lost,” it said in a post-meeting statement.

The statement did not include a revision to its July inflation outlook, projecting 1.0 percent for the year to March 2020 and 1.3 percent for the following year.

Those figures are far short of the two percent inflation that the BoJ has long set as its target - a figure seen as key to turbocharge the world’s third largest economy.

The European Central Bank unveiled last week a massive stimulus program and cut interest rates to goose the sluggish eurozone economy.

And on Wednesday the US central bank cut its benchmark interest rate for the second time this year.

While noting policymakers do not expect a recession, Federal Reserve chief Jerome Powell vowed to do whatever is needed to keep the economy growing.

Japan’s central bank has unleashed a barrage of stimulus and monetary easing in a bid to reach the long-targeted two percent inflation figure.

But progress has been painfully slow, with the BoJ blaming a “deflation mindset” that continues to weigh on the national economy.

Bank of Japan governor Haruhiko Kuroda is expected to speak later Thursday.
 

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Last Update: Thursday, 19 September 2019 KSA 06:47 - GMT 03:47
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