BOJ Keeps Policy Rate Unchanged at 0.75%... "Cautions on Rising Oil Prices"

Rate Held Steady for Second Consecutive Meeting

The Bank of Japan (BOJ) decided on March 19 to keep its benchmark interest rate unchanged at 0.75%.

Nikkei and Kyodo News reported that the BOJ, during a two-day monetary policy meeting that concluded on this day, decided to maintain the short-term policy rate, which serves as the benchmark interest rate.

BOJ exterior. Photo by Reuters Yonhap News Agency

The BOJ raised its rate from "around 0.5%" to "around 0.75%" in December of last year, and has now held the rate steady for two consecutive meetings through today.

Previously, Bloomberg conducted a survey of 51 economists regarding the BOJ's rate decision, and all respondents expected the rate to remain unchanged. Foreign media outlets also projected that the BOJ would maintain its rate, citing increased uncertainty in the Middle East following the U.S. and Israeli attacks on Iran and a surge in international oil prices.

During this meeting, 8 out of 9 policy board members supported holding the rate steady. Only board member Hajime Takada proposed raising the rate to 1%, viewing the possibility of rising Japanese prices due to spillover effects from overseas inflation as significant. He had also proposed a rate hike at the January meeting.

In a statement released after the meeting, the BOJ noted, in relation to heightened tensions in the Middle East, that "unstable movements are appearing in global financial and capital markets" and that "crude oil prices are also rising sharply, so caution is needed regarding future trends." The BOJ also stated that it is necessary to pay attention to the impact of rising oil prices on underlying inflation.

However, the BOJ reaffirmed its previous assessment that the Japanese economy will continue its moderate growth trend and that both wages and prices will gradually rise. The BOJ expects to achieve its 2% inflation target sometime between the end of this year and 2027.

Mari Iwashita, fixed income strategist at Nomura Securities, commented, "The BOJ appears to be saying it needs more time to assess the situation, as it is unclear how long high oil prices will persist due to the situation in the Middle East."

Future rate decisions are also expected to be influenced by the weakening of the yen. On this day, the yen-dollar exchange rate rose at one point to 159.89 yen per dollar.

This content was produced with the assistance of AI translation services.