The Bank of Japan (BOJ) headquarters is seen beyond the cherry blossoms in Tokyo on March 20, 2023.
Kazuhiro Nogi | Afp | Getty Images
The Bank of Japan on Thursday held its benchmark interest rate steady at 0.25%.
The decision comes a day after the U.S. Federal Reserve cut rates by 25 basis points, bringing the federal funds rate to 4.25%-4.5%.
The yen weakened 0.16% against the dollar after the rate decision, trading at 155.06.
The BOJ said in its statement that the decision to hold was a split 8-1 decision, with board member Naoki Tamura advocating for a 25-basis-points hike.
The central bank did note, however, that there “remain high uncertainties surrounding Japan’s economic activity and prices.”
As such, its view was that it was necessary to “pay due attention” to developments in financial and foreign exchange markets and their impact on Japan’s economic activity and prices.
“In particular, with firms’ behavior shifting more toward raising wages and prices recently, exchange rate developments are, compared to the past, more likely to affect prices,” the bank added.
The BOJ’s decision was in line with a CNBC poll, which showed that 13 out of 24 economists expected the BOJ to keep its key interest rate unchanged in December before raising the rate at the next meeting in January.
The survey was conducted between Dec. 9-13, before the Fed signaled that there would be fewer rate cuts in 2025.
A Dec. 13 note from Citi forecast that the BOJ will hike three times in 2025, bringing the rate to 1%.
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