Dec 19 (Reuters) – The Bank of Japan raised its interest rates on Friday to levels unseen in three decades and signalled its readiness for further hikes, taking another landmark step in ending decades of huge monetary support and near-zero borrowing costs.
In a widely expected move, the BOJ raised short-term interest rates to 0.75% from 0.5% in the first increase since January. The decision was made by a unanimous vote.
Following are excerpts from BOJ Governor Kazuo Ueda’s comments at his post-meeting news conference, which was conducted in Japanese, as translated by Reuters:
POLICY ADJUSTMENTS WILL DEPEND ON DATA AT EACH MEETING
“As for the pace of how we adjust our monetary support, that will depend on economic, price, financial developments at the time. We will update at each meeting our views on the economic, price outlook as well as risks and the likelihood of achieving our forecasts, and make an appropriate decision.”
NEUTRAL RATE UNCERTAIN; POLICY TO DEPEND ON ECONOMIC SCENE
“Our estimate on Japan’s neutral rate sits on a pretty wide range. It’s hard to set a pin-point estimate … We’d like to look at how the economy and prices react to each change in short-term rate.”
MONETARY SUPPORT WILL CONSIDER REAL RATES AND LENDING
“In judging the degree of monetary support, we need to look not just at the distance from the neutral rate but real interest rates, lending and developments in the economy.” RATES BELOW NEUTRAL; BOJ TO MONITOR ECONOMY FOR POLICY MOVES
“Even after raising rates to 0.75%, there’s some distance to the bottom of our estimated range of neutral. In judging where the neutral rate sits, we need to look at how the economy and prices respond to each policy adjustment.”
BOJ OFFICIALS FLAG SOFTER YEN COULD PUSH PRICES HIGHER
“At today’s meeting, a few board members said recent yen declines could exert upward price pressure and impact underlying inflation.”
NEW NEUTRAL RATE ESTIMATES MAY NOT NARROW RANGE
“We will seek to produce new estimates on Japan’s neutral rate, if needed, though I don’t think that will help us narrow the range that much.”
(Reporting by Leika Kihara; Editing by Sherry Jacob-Phillips)
