Bank of Japan continues to ease policy despite rate hikes in US and Europe – Economy


Tokyo, Japan ●
Fri, June 17, 2022

Japan, economy, inflation, dollar, Bank of Japan, monetary easing

On Friday, the Bank of Japan stuck to its longstanding policy of monetary easing even as other central banks around the world raised interest rates to keep inflation under control.

But he said he would “pay due attention” to currency markets, a rare comment that comes after the yen hit a 24-year low against the dollar.

In a statement after a two-day policy meeting, the BoJ kept its rate at minus 0.1% – part of a decade-old action plan to boost the third-biggest world economy – thwart pressure to deal with the impact of a weaker yen.

His decision goes against a global tightening trend aimed at tackling exorbitant fuel and food prices linked to the war in Ukraine and supply chain problems.

Global interest rate hikes have been led by the US Federal Reserve, which this week announced its most aggressive hike in nearly 30 years and announced it was going further in a battle to bring inflation down .

The European Central Bank is also planning to begin a series of rate hikes next month, while the Bank of England on Thursday announced a fifth consecutive hike and Switzerland surprised markets with its own hike, the first since 2007. .

The widening gap between Japanese and US monetary policy has pushed the yen to its lowest level against the dollar since 1998, a growing concern that even the central bank has cited.

“It is necessary to pay due attention to developments in financial and foreign exchange markets and their impact on economic activity and prices in Japan,” the BoJ said, in an unusual reference to forex movements.

After the announcement, one dollar bought 134.23 yen, from 133.41 yen earlier in the day.

Inflation has been rising for months in the United States and elsewhere as sustained demand for homes, cars and other goods clashes with supply chain grunts in parts of the world where COVID-19 has been , or remains, a challenge.

The problem escalated dramatically after Russia invaded Ukraine in February and Western countries imposed harsh sanctions on Moscow, driving up food and fuel prices at a frenzied rate.