The Bank of Japan (BoJ) held its key short-term interest rate steady at approximately 0.25% during its final meeting of the year, maintaining the highest level since 2008 and aligning with market expectations.
Bank of Japan holds rates as expected
The decision, passed by an 8-1 vote, saw board member Naoki Tamura dissenting in favor of a 25 basis point hike. Despite the U.S. implementing its third rate cut of the year, the BoJ opted to take more time to evaluate risks, particularly U.S. economic policies under Donald Trump and the wage outlook for the coming year. The board reaffirmed its view that Japan’s economy is on course for a moderate recovery, although some weaknesses persist.
Private consumption continued to grow
Private consumption continued to grow, supported by rising corporate profits and business investment, while exports and industrial output remained largely unchanged. Year-on-year inflation ranged between 2.0% and 2.5%, driven by higher service costs, with inflation expectations showing moderate growth. The underlying CPI is projected to increase gradually.
