Bank of Japan to keep interest rates stable
The Bank of Japan will announce whether it will move interest rates today; it would be a surprise if the ultra-loose policy—interest rates currently stand at -0.1%—is altered.
While the US raised interest rates to 1.25% this week in anticipation of stronger economic growth and rising inflation, Japanese inflation is still well below the 2% target set by central bankers.
This highlights the key problem of PM Shinzo Abe’s economic policy, which aims to boost growth with loose monetary policy this year, it’s been outpaced by the accumulation of government debt, which has risen to a staggering 245% of GDP—the highest in the world.
With loose monetary policy not having the desired effect—and with a strong legislative hand—Mr Abe may try to accelerate the speed of structural reforms.
