The Bank of Japan will keep interest rates unchanged for the third consecutive meeting.

Key receivers

For the third straight meeting, the Bank of Japan kept interest rates at 0.25%. Unchanged rates reflect domestic wage growth and cautious monitoring of US economic policies.

Share this article

The Bank of Japan (BOJ) left interest rates unchanged at 0.25% at Thursday's meeting (local time) for the third consecutive time following similar decisions in September and October.

The choice to keep interest rates at their current levels is somewhat predictable. According to a recent report from CNBC, the majority of economists predicted the BoJ would leave rates unchanged at the end of its December 19 meeting, although many predicted a rate hike in January based on economic indicators.

The BOJ's decision comes as the US Fed cut its benchmark interest rate by 25 basis points on Wednesday, the third rate cut since the outbreak of the Covid-19 pandemic four years ago. Despite cutting rates, the Fed struck a more dovish tone than expected. Fed Chairman Jerome Powell stressed that future rate cuts will be more deliberate given continued inflation and economic uncertainty.

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

Japan's standard wage has been rising 2.5% to 3% annually, with inflation above the BOJ's 2% target for more than two years. However, the recent slowdown in domestic spending has contributed to the bank's cautious stance on growth.

The BoJ hiked last July and has signaled its willingness 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 hurt Japan's economic outlook.

Following recent media reports, market expectations of a price hike in December have eased. Analysts suggest the BoJ may expect results from the upcoming wage negotiations in early 2025 before adjusting monetary policy.

This is a growing story.

Share this article