Bank of Japan governor says focus is on 'extremely watchful of downside risks to the economy'.
Bank of Japan Gov. Masaaki Shirakawa said Monday that the central bank is now focused on threats to Japan's economic health, reaffirming sentiment that the country's low interest rates won't be raised anytime soon.
The Bank of Japan "is in a situation that requires us to be extremely watchful of downside risks to the economy," said Shirakawa, in one of his first speeches since he began his post last month. In its April semiannual outlook report, the Bank of Japan lowered its outlook for growth and retreated from its longtime goal of gradually raising interest rates.
Japan's key interest rate has remained at 0.5 percent since February 2007. Shirakawa reiterated Monday that it wasn't appropriate to predetermine the direction of future monetary policy amid market volatility and a global economic slowdown. Adding to the uncertainty are rising commodity and energy prices, which pushed up Japan's core consumer price index 1.2 percent in March in its biggest jump in ten years, he said.
The central bank said in its report that it expects the world's second largest economy to expand 1.5 percent in the fiscal year through March 2009, down from the 2.1 percent growth it projected in October.
Japan's economy will probably continue to decelerate for the time being but should eventually return to mild growth, at which point the central bank would need to consider tweaking interest rates, said Shirakawa at the Japan National Press Club in Tokyo.
The fundamental goal of monetary policy is to stabilize prices over the medium- and long-term, he said. "This means that the central bank may need to implement policies that may be unpopular in the short term," Shirakawa said.
Bank of Japan Gov. Masaaki Shirakawa said Monday that the central bank is now focused on threats to Japan's economic health, reaffirming sentiment that the country's low interest rates won't be raised anytime soon.
The Bank of Japan "is in a situation that requires us to be extremely watchful of downside risks to the economy," said Shirakawa, in one of his first speeches since he began his post last month. In its April semiannual outlook report, the Bank of Japan lowered its outlook for growth and retreated from its longtime goal of gradually raising interest rates.
Japan's key interest rate has remained at 0.5 percent since February 2007. Shirakawa reiterated Monday that it wasn't appropriate to predetermine the direction of future monetary policy amid market volatility and a global economic slowdown. Adding to the uncertainty are rising commodity and energy prices, which pushed up Japan's core consumer price index 1.2 percent in March in its biggest jump in ten years, he said.
The central bank said in its report that it expects the world's second largest economy to expand 1.5 percent in the fiscal year through March 2009, down from the 2.1 percent growth it projected in October.
Japan's economy will probably continue to decelerate for the time being but should eventually return to mild growth, at which point the central bank would need to consider tweaking interest rates, said Shirakawa at the Japan National Press Club in Tokyo.
The fundamental goal of monetary policy is to stabilize prices over the medium- and long-term, he said. "This means that the central bank may need to implement policies that may be unpopular in the short term," Shirakawa said.
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