Bank of Japan Maintains Cautious Stance on Negative Rates Amidst Lack of Inflation Proof

The Bank of Japan (BOJ) has reportedly indicated a reluctance to terminate its negative interest rate policy in December. This decision stems from the BOJ’s perception that there is insufficient evidence of sustained inflation. The central bank seems to be cautious, emphasizing the need for concrete proof of a lasting and robust upward trend in inflation before considering a shift in its monetary policy.

The Bank of Japan is undertaking a review of the benchmark ratio utilized for calculating the macro add-on balance in current account balances.

In line with this stance, the BOJ is reported to be committed to making decisions based on the most current and relevant data available, up to the very last minute. This approach underscores the central bank’s dedication to a data-driven decision-making process, suggesting that it is closely monitoring economic indicators and inflationary pressures as it navigates its monetary policy decisions.

The Bank of Japan has established a benchmark ratio of 63.5% for the December 2023 period.

Following these reports, the Japanese yen has experienced a continued decline, with the currency extending its losses after news broke that the BOJ intends to exercise patience regarding negative interest rates. The yen’s value has now reached 146.30, marking a day high. This market reaction reflects the impact of central bank decisions on currency dynamics, as traders respond to the nuanced signals and indications provided by the BOJ’s approach to monetary policy.