Japan Interest Rate

The Bank of Japan left its key short-term interest rate unchanged at -0.1% and kept the target for the 10-year government bond yield at around 0% during its September meeting by an 8-1 vote, as expected. Policymakers, however, offered a bleaker view on exports and factory output, amid supply-chain disruptions mainly for chips and parts from Southeast Asia. Meantime, employment and income remained weak due to the COVID-19. Private consumption stayed stagnant, due to continuing strong downward pressure on consumption of services. On the price front, the yoy rate in the CPI has been around 0%, amid a rise in energy cost and despite a drop in mobile phone charges. Meanwhile, inflation expectations have been more or less unchanged. The BoJ reiterated it will not hesitate to take more easing measures if necessary while expecting short-and-long-term policy rates to remain at their present or lower levels. The central bank also said it will start to roll out climate change loans in December.