Japan is playing the long game. The country’s central bank has decided to put on hold an interest rate rise, despite the changing global economic climate.
On Saturday, Bank of Japan Governor Haruhiko Kuroda made it clear that the BOJ would not be raising rates “for quite a long time” in an interview published by the Yomiuri newspaper.
His comments came as the United States and major European nations tighten monetary policy.
“It’s a commitment that we will maintain the current low levels [of rates] as long as uncertainty lingers,” Kuroda said. “We don’t intend to raise them for quite a long time.”
The BoJ has struggled for years to reach the 2% inflation rate deemed necessary to turbocharge Japan’s economy and has defended its decision to maintain monetary easing even as other central banks tighten policy.
After its last meeting in July, the BoJ confirmed that it “intends to maintain the current extremely low levels of short-and long-term interest rates for an extended period of time.”
Still, Kuroda’s remarks are in sharp contrast to the direction the US and European central banks are taking.
The Federal Reserve is expected to raise interest rates twice more by the end of the year while the European Central Bank is exiting massive monetary easing.
Kuroda argued that the continuation of the BoJ’s easing policy would “naturally” lead to 2% inflation even if later than earlier thought.
Reporting from AFP