The announced stimulus is in line with the policy of the Japanese Central Bank, the Bank of Japan, which left the main interest rate unchanged on Tuesday at minus 0.1 percent. According to the bank’s Governor Kazuo Ueda, it is important to stick to a very loose stimulus policy to promote economic recovery as the bank steadily approaches its long-sought inflation target.
For the current budget year, inflation, excluding highly fluctuating food prices, is now expected to be 2.8 percent. Previously it was 2.5 percent. The next year is also expected to be 2.8 percent, against a previous inflation expectation of 1.9 percent.
Japan suffered from very low inflation for decades and has not seen such steady price growth since 1992. The Bank of Japan is the only major central bank in the world to stubbornly stick to negative interest rates. They will continue to do so until there are signs of sustainable wage and price growth.
2023-11-02 03:41:00
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