InstaForex

September 22, 2021

Japan's Economy Still Worsening, BOJ Maintains Interest Rates

 The Bank of Japan (BOJ) maintained monetary policy unchanged today but gave a more gloomy view of exports and production following the global supply chain disruption caused by Covid-19.


As widely expected, interest rates remained unchanged at lows at -0.10% and the 10 -year government bond yield target was also set at around 0%.


The BOJ has previously made it clear that they will only consider tightening monetary policy when growth, jobs and inflation are enough to warrant it.



Economic growth in the second quarter was strong with a growth of 1.9%, but this record does not include the impact of the spread of delta variant outbreaks which have resulted in emergencies being implemented in some of the affected regions.


This was followed by weakening production and export data following global supply chain disruptions due to factory closures in Asia following restrictive measures implemented to curb the spread of delta variants. This weakness poses a risk for a slowdown in Japan’s economic recovery.


However, the BOJ still defended its assessment of the economy by saying it continued to show improvement despite still being in dire straits due to the coronavirus pandemic.


Weak inflation has also strengthened the central bank’s view to maintain its stimulus. Core consumer prices fell 0.2% in July due to weak consumption.