The Bank of Japan decided to keep the cash rate steady as well as revising up its economic growth forecast.
In a decision released on Tuesday, the Bank of Japan decided to leave the interest rate unchanged at -0.1 percent, signaling a cautious optimism regarding the future of the world’s economy, as the United States and China agreed to sign the phase 1 of the trade deal that would put an end to a trade war that has destabilized the world’s economy.
“Japan’s economy is likely to continue expanding moderately as a trend,” said the Bank on its report, “While risks surrounding overseas economies have subsided somewhat, they remain big,” continued the Bank.
The Bank’s governor Naruhiko Kuroda expects the stimulus packages implemented by the Japanese government, as well as the improving global situation, to diminish the impact of a weakening global demand and the disruption of the global supply chains.
“Japan’s economy is likely to continue expanding moderately as a trend,” said Kuroda, “There is no change to the price trend,” he added.
Regarding the bank’s growth forecast for this year, it was revised up to 0.9 percent from 0.7 percent. The International Monetary Fund
Some analysts consider that the Bank’s decision makes sense given the fact that central banks of the rest of the world are also pausing their policies.
“Given that the yen has stabilized and other major central banks are pausing on policy, there’s no reason for the BOJ to take action for the time being,” said an analyst at Mizuho Securities.
The bank also signaled that its comfortable with the current Yen level.
“The bottom line is that the BOJ is comfortable with the current Yen level and it doesn’t want to change that by indicating optimism or change in its cautious view,” said an analyst at Okasan Securities.
By 10:00 GMT the US dollar went down against the Japanese Yen, hitting the 109.96 level.