Rolling coverage of the latest economic and financial news
The Bank of Japan’s deputy governor, Shinichi Uchida, has welcomed the US-Iran peace deal.
Speaking at a press conference following today’s rate hike, Uchida said the deal was a “welcome move”, explaining:
“Compared with our previous meeting in April, the U.S. and Iran have signed a memorandum. That is a welcome move. Having said that, there is uncertainty on the pace of improvement in distribution (of oil).”
Compared with the previous meeting, the risk of a sharp deterioration in the economy has diminished. On the other hand, price rises are broadening, and there is a risk that underlying inflation may deviate from our target.”
“With underlying inflation approaching 2%, it’s important to ensure we achieve our target stably.”
The Bank of Japan has raised its key interest rate to a 31-year high as a precaution, to try and stop energy costs being embedded more deeply across the economy.
The move – increasing the short-term policy rate to 1% from 0.75% – was widely expected, but it’s a step-change in monetary policy for Japan, given it pushes borrowing costs to levels not seen since 1995. There was some relief that the move wasn’t more hawkish, with even a 50-basis-point hike having been mooted.
Continue reading...
