Bank of Japan keeps interest rates unchanged for third straight meeting

Key Takeaways

The Bank of Japan kept interest rates at 0.25% for the third straight meeting.
Unchanged rates reflect careful scrutiny of domestic wage growth and US economic policies.

The Bank of Japan kept interest rates unchanged at 0.25% during its Thursday meeting, marking the third consecutive hold after similar decisions in September and October.

The decision was not expected. According to a recent survey, a narrow majority of economists expected the BoJ to keep rates on hold at the end of its two-day meeting on December 19. Many, however, expected a rate hike in January based on economic indicators.

The central bank's stance reflects its cautious approach as it monitors domestic wage growth, spending patterns, and possible policy moves under the incoming Trump administration. in.

Regular wages in Japan have been rising at an annual rate of 2.5% to 3%, driving inflation above the BoJ's target of 2% for more than two years. However, a recent slowdown in housing consumption has contributed to the bank's cautious approach to rate hikes.

The BoJ last raised rates in July and has indicated it was prepared to tighten further if wage growth meets expectations. The central bank is also weighing external factors, particularly the impact of US economic policies under Trump, which could affect Japan's economic outlook.

Market expectations for a rate hike in December have dampened following recent media reports. Analysts indicate that the BoJ may wait for results from wage negotiations due in early 2025 before changing monetary policy.

The decision comes as the US Federal Reserve cut interest rates by 25 basis points on Wednesday, its third cut since the start of the coronavirus pandemic more than four years ago.

This is a developing story.