The Bank of Japan said Wednesday that it will maintain its “zero-interest-rate” policy, which has been in place since February last year.
The decision was reached in a majority vote at a meeting of the BOJ’s nine-member Policy Board.
Although data indicate the economy is beginning to get on a recovery track, a majority of the board decided that more time is needed to confirm improvements in employment and personal income, key factors that determine personal consumption, which is the biggest component of the economy.
Many board members also considered it wise to make any changes in monetary policy only after the release Tuesday of the BOJ’s closely watched quarterly “tankan” business sentiment survey.
Recent remarks by key BOJ officials indicate the central bank is hoping to terminate easy-money policy.
Earlier this month, BOJ Deputy Govs. Sakuya Fujiwara and Yutaka Yamaguchi hinted on separate occasions that BOJ board members are entertaining the idea of raising interest rates.
Although markets believe the central bank could act shortly, the government is apparently trying to block the BOJ’s plan, with Taichi Sakaiya, head of the Economic Planning Agency, saying that an interest rate hike in June or July would be difficult.
Under the current policy, the BOJ has guided its target rate for unsecured overnight call money, for interbank transactions, as low as possible to boost the economy.