Bank of Japan Confirms Long Path Ahead to Neutral Interest Rate

Bank of Japan Governor Haruhiko Kuroda stated that the Bank continues its strategy of loose monetary policy, emphasizing that the country's economy has not yet reached a state of sustainable growth, which indicates the need to maintain the current low interest rate. In his speech, Kuroda highlighted that the benchmarks the Bank uses to determine a neutral interest rate remain significantly distant, and that numerous factors must be considered in evaluating the possibility of achieving it in the future.

Kuroda also added that Japan still faces risks associated with inflation, as well as household income shortages. He emphasized the necessity of continuously monitoring the economic situation and stressed the importance of maintaining flexibility in monetary policy to effectively respond to changes in the economic environment.

The situation regarding Japan's economy shows signs of change. Despite some growth indicators, such as rising incomes in the services sector, the country still faces a complex set of challenges, including structural issues that hinder more dynamic economic development.

Kuroda assured investors that the Bank of Japan would act to maintain the necessary level of liquidity and confidence in financial markets, which would ensure stability and predictability in the economy. He also underlined that any changes in monetary policy would occur gradually and in alignment with current economic realities.

Thus, the Bank of Japan continues its perilous practice, focusing on maintaining low interest rates to support its economy, despite escalating challenges and the need for reforming the current growth model.

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