TOKYO, May 17: Japan’s central bank left its interest rates unchanged on Thursday but flagged future rises to ensure sustainable growth, possibly even if consumer prices continue to fall.
Bank of Japan governor Toshihiko Fukui reiterated that an excessively loose monetary policy could store up trouble for the future, after the BoJ decided, as expected, to keep its benchmark interest rate unchanged at 0.5 per cent.
“Low interest rates, if left too long at levels that do not reflect economic fundamentals, could distort the distribution of resources and hinder the economic recovery,” he told a press conference.
“So, when there is a strong possibility of the economy sustaining growth amid stable price trends, there is a need to adjust interest rates in tandem with the pace of improvement in the economy, while monitoring various risks.”
The BoJ’s nine-member policy board has left the super-low interest rates on hold since February's quarter-point hike, which was the first since last July when it ended over five years of virtually free credit.—AFP
