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BOJ sends clearer signal of rate cut chance

Published : Friday, 1 November, 2019 at 12:00 AM  Count : 36

TOKYO, Oct 31: The Bank of Japan kept monetary policy steady on Thursday as expected but gave the strongest signal to date that it may cut interest rates in the near future, underscoring its concern that overseas risks could derail a fragile economic recovery.
BOJ Governor Haruhiko Kuroda said the central bank still had room to take already negative rates even lower to prevent global uncertainties from hurting the world's third-largest economy.
"The chance of the economy losing momentum to hit our price (inflation) target hasn't escalated. But we need to scrutinize developments as overseas uncertainties are heightening," Kuroda said.
"It's still possible for the BOJ to deepen negative rates," he told a news conference after a policy view, adding the costs of doing so would not deter him from taking short-term rates beyond the current -0.1per cent.
The decision came hours after the US Federal Reserve lowered rates again but signaled a pause in further cuts unless the economy took a turn for the worse.
The BOJ, which has far less policy ammunition left than the Fed, maintained its short-term rate target at -0.1per cent and that for the 10-year bond yield at around 0per cent.
It also maintained a pledge to buy government bonds so its holdings increase at an annual pace of roughly 80 trillion yen ($736 billion).
But the BOJ modified its forward guidance - a signal central banks give to markets on future policy moves - to indicate more clearly its readiness to cut rates if needed.    -Reuters











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