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The
Bank of Japan issued its decision on the overnight call rate
after a two-day meeting by its policy board.
“Japan’s economy has recovered moderately, although some
weakness has been seen in part. Overseas economies have grown
moderately on the whole,” it said in a statement.
The U.S. Federal Reserve cut its policy rate by 0.25 percentage
points earlier this week, the Fed’s first cut since December,
and lowered its short-term rate to about 4.1%, down from 4.3%.
Japan had been ailing from deflationary trends in recent years,
but prices are gradually rising. Recent government data show
consumer prices rising above the central bank’s target of 2%, at
between 2.5% and 3%.
The Bank of Japan noted exports will be hit by higher tariffs,
which have come about because of U.S. President Donald Trump’s
policies. There was an increase in trade in anticipation of the
tariffs, but those rises are now tapering off, it said.
Also mentioned as a risk factor was the uncertainty in domestic
politics. Prime Minister Shigeru Ishiba is stepping down, and
the ruling party is holding an election to choose a new leader.
Five candidates are expected to enter the race, with a party
vote coming early next month. The grip on power by the Liberal
Democratic Party, which has ruled postwar Japan almost
incessantly, appears to be unraveling lately.
The Japanese stock market has been booming recently, with the
benchmark Nikkei 225 hitting another record Thursday, cheered by
the Fed’s rate cut. Shares were falling slightly in Friday
morning trading.
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