Japanese interest rates unchanged - Central bank controls Swissie’s appreciation
Japanese interest rates unchanged - Central bank controls Swissie’s appreciation
05-02-2010 08:25
The Bank of Japan has held its key interest rate close to zero today. It announced that it would increase measures to strengthen the Japanese economy. The eight-member policy board of Japan’s central bank unanimously agreed to keep its overnight call rate target at 0.1%. The last interest rate adjustment took place in December 2008.Consumer prices
Japan’s central bank stated that its monetary police would remain very accommodative to control deflation. Consumer prices dropped for the 13th consecutive month in March, according to a government report.Bank of Japan
Board members believe that the Bank of Japan has to increase its efforts to boost the economy. Masaaki Shirakawa, governor of the Bank of Japan, has instructed his staff to create plans that financially aid banks.Deflation
The Bank of Japan has declared that it would fight deflation. It believes that prices will drop in the next few years. Deflation frustrated Japan after the asset price bubble collapsed within the Japanese economy (the so-called ‘lost decade’). The frail recovery of the Japanese economy is threatened by deflation.Japanese media suggest that Japan’s central bank may raise its price forecasts.
Appreciation
The Swissie fell slightly versus the Single Currency this Friday, while it later returned to its opening rate. Philipp Hildebrand leads the Swiss National Bank (SNB). He stated that a further increase of the Swiss Franc will be restricted. Hildebrand added that Swiss officials determinedly prevent an extreme appreciation.Swissie
The Greece financial crisis may favor the Swissie. Europe’s Common Currency may weaken as a result of the Greece budget deficits, subsequently boosting the demand for Swiss Francs. Additionally, the appreciation may affect the status of the Swissie as a safe haven currency.
