BOJ Keeps Rates Unchanged

By Megumi Fujikawa

TOKYO--The Bank of Japan left its short-term policy rate unchanged Friday as it examines how the economy and markets are digesting its most recent interest-rate increase.

The Japanese central bank maintained its target for the overnight call rate at 0.25% after raising it to that level in July. In March, the BOJ ended the world's last negative interest rate policy and set the target at a range of 0% to 0.1%.

The bank was widely expected to stand pat on Friday. However, analysts and investors expect the BOJ to raise interest rates again in the coming months once the markets become more stable.

Following its July move, BOJ Gov. Kazuo Ueda said the bank would continue to raise rates if the economy and prices are in line with its projections.

Over the past month, the BOJ's pledge to pursue more rate increases, alongside concerns over the outlook for the U.S. economy, caused wild swings in the markets. The Nikkei Stock Average suffered its worst day since 1987 in early August.

The yen has been volatile against the dollar on speculation over the Federal Reserve's rate cuts. On Wednesday, the Fed cut interest rates by a half-percentage point, marking its first reduction since 2020.

Focus is now on Ueda's news conference later Friday for any hints on the timing of further rate increases and his assessment of recent market developments, as the bank has said it won't raise rates when the markets are volatile.

"Governor Ueda has shown a certain degree of cautiousness about further rate rises following the August [stock market] sell-off and resultant volatility," said Katsutoshi Inadome, a strategist at SuMi TRUST.

Inadome still expects the bank to raise rates by 25 basis points later this year if domestic consumption and economic growth continue to improve.

The BOJ on Friday maintained its assessment of the Japanese economy, saying it has recovered moderately despite some weakness. It also said careful attention should be paid to the impact of currency and other market movements on the economy.

Government data released earlier Friday showed that consumer inflation picked up in August. Overall consumer prices rose 3.0% in August from a year earlier, faster than the 2.8% growth in July.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

September 19, 2024 23:24 ET (03:24 GMT)

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