The Bank of Japan recently made it clear that it will not raise interest rates when markets are unstable, according to Deputy Governor Masayoshi Amamiya. This statement comes as global markets continue to be rocked by volatility and uncertainty, with concerns about trade tensions, geopolitical risks, and slowing economic growth weighing heavily on investors’ minds.
In a speech delivered at a financial forum in Tokyo, Amamiya emphasized the importance of maintaining stability in the financial markets, stating that the central bank’s primary goal is to ensure the stability of the financial system and support economic growth. He noted that raising interest rates during times of market instability could exacerbate volatility and have negative consequences for the economy.
The Bank of Japan has kept its key interest rate at -0.1% since early 2016, as part of its efforts to stimulate inflation and boost economic growth. Despite these efforts, Japan has struggled to achieve its 2% inflation target, with consumer prices remaining stubbornly low.
Amamiya’s comments suggest that the central bank is taking a cautious approach to monetary policy, opting to prioritize stability over the potential benefits of raising interest rates. This stance is in line with the bank’s commitment to supporting economic growth and inflation, even as global economic uncertainties continue to pose challenges.
The decision not to raise rates during times of market instability reflects a broader trend among central banks around the world, as policymakers grapple with the impact of trade tensions, political risks, and slowing growth on the global economy. Many central banks, including the Federal Reserve and the European Central Bank, have signaled their intention to maintain accommodative monetary policies in the face of these challenges.
Overall, the Bank of Japan’s commitment to stability and support for economic growth is likely to be welcomed by investors and market participants, as it provides a sense of reassurance in uncertain times. By prioritizing stability over rate hikes, the central bank is sending a clear message that it is prepared to take proactive measures to support the economy and ensure that financial markets remain orderly.