Bank of Japan Monetary Policy Meeting 24th January 2025: Increased Central Bank Interest Rate by +0.25% from 0.25% to 0.5% & Targeting 2% Inflation
26th January 2025 | Hong Kong
Bank of Japan Monetary Policy Meeting 24th January 2025 – Bank of Japan has increased the central bank interest rate by +0.25% from 0.25% to 0.5%, and targeting 2% inflation. Announcement (24/1/25): “At the Monetary Policy Meeting (MPM) held today, the Policy Board of the Bank of Japan decided, by an 8-1 majority vote, to set the following guideline for money market operations for the intermeeting period: The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5 percent. In accordance with the change in the guideline for money market operations, the Bank decided to change the interest rates applied to its measures, by an 8-1 majority vote … … Japan’s economic activity and prices have been developing generally in line with the outlook presented in the previous Outlook for Economic Activity and Prices (Outlook Report), and the likelihood of realizing the outlook has been rising. Japan’s economy has recovered moderately, although some weakness has been seen in part. Regarding wages, with a continued improving trend in corporate profits and a growing sense of labor shortage, there have been many views expressed by firms stating that they will continue to raise wages steadily in this year’s annual spring labor-management wage negotiations, following the solid wage increases last year. On the price front, underlying CPI inflation has been increasing gradually toward the price stability target of 2 percent. With wages continuing to rise, there has been an increase in moves to reflect higher costs, such as increased personnel expenses and distribution costs, in selling prices. In this situation, although the effects of a pass-through to consumer prices of cost increases led by the past rise in import prices have waned, the year-on-year rate of increase in the CPI (all items less fresh food) is likely to be in the range of 2.5-3.0 percent for fiscal 2024 and then be at around 2.5 percent for fiscal 2025, partly due to higher import prices stemming from factors such as the recent depreciation of the yen. In the meantime, while attention has been drawn to various uncertainties, global financial and capital markets have been stable on the whole, as overseas economies have followed a moderate growth path. In view of these circumstances, the Bank judged it appropriate to adjust the degree of monetary accommodation from the perspective of sustainable and stable achievement of the price stability target of 2 percent. Real interest rates are expected to remain significantly negative after the change in the policy interest rate, and accommodative financial conditions will continue to firmly support economic activity. As for the future conduct of monetary policy, while it will depend on developments in economic activity and prices as well as financial conditions going forward, given that real interest rates are at significantly low levels, if the outlook for economic activity and prices presented in the January Outlook Report will be realized, the Bank will accordingly continue to raise the policy interest rate and adjust the degree of monetary accommodation. With the price stability target of 2 percent, it will conduct monetary policy as appropriate, in response to developments in economic activity and prices as well as financial conditions, from the perspective of sustainable and stable achievement of the target.”
“ Bank of Japan Monetary Policy Meeting 24th January 2025: Increased Central Bank Interest Rate by +0.25% from 0.25% to 0.5% & Targeting 2% Inflation “
Bank of Japan Monetary Policy Meeting 24th January 2025: Increased Central Bank Interest Rate by +0.25% from 0.25% to 0.5% & Targeting 2% Inflation
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