Japan maintains key interest rate
BOJ Governor says negative rates could hurt financial firms’ funding.
OCBC Treasury Research noted:
As widely expected, BOJ maintained its key interest rate unchanged on Tuesday and also kept its credit-loan and asset-purchase programs unchanged at a total of JPY 91tn. The central bank said that the Japanese economy is weakening and that there is a need to continue keeping a close look on the economy going forward, with impact from currency movement one of the key factors to weigh in.
BOJ Governor Shirakawa said that the BOJ will continue to remain supportive to growth but indicated that negative rates could hurt financial firms’ funding. He also commented that the BOJ’s independence should be respected and suggested that the government should do more to boost the economy.
Meanwhile, Econ Minister Maehara said that he expects the central bank to continue implementing aggressive monetary loosening.
Opposition LDP said that they will work on an inflation target pact with the BOJ. Elsewhere, opposition leader Abe denied allegations that he is in favor of the BOJ purchasing government’s construction bonds.
Export growth slumped to -6.5% yoy in October, driven by the -11.6% yoy export growth to China.