The Bank of Japan (BOJ) defied the U.S. Federal Reserve's rate cut by maintaining its key interest rate at -0.1% for December.
The Bank of Japan (BOJ) has decided to keep its key interest rate unchanged at -0.1% for December. This decision follows the U.S. Federal Reserve 's 25-basis-point rate cut, bringing the federal funds rate to 4.25%-4.5%. The BOJ's decision was a split 8-1 vote, with board member Naoki Tamura advocating for a 25-basis-point hike.
However, the central bank acknowledged 'high uncertainties' surrounding Japan's economic activity and prices, emphasizing the need to monitor financial and foreign exchange market developments. The BOJ noted that firms' recent shift towards raising wages and prices makes exchange rate fluctuations more likely to impact prices. The BOJ's decision aligns with a CNBC poll predicting the rate to remain unchanged in December and potentially rise in January. While a December 13th note from Citi predicted the BOJ would raise rates three times in 2025, reaching 1%, a veteran Japan analyst states the BOJ should continue raising rates to mitigate the risk of another major Yen sell-off
BANK OF JAPAN INTEREST RATE ECONOMIC POLICY JAPAN FEDERAL RESERVE
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