TOKYO – Bank of Japan chief Kazuo Ueda said Friday the central bank will decide on future interest rate hikes based on economic and price conditions.
At a news conference after the BOJ’s two-day policy meeting, Ueda said that Japan’s real interest rates remain at “significantly low” levels, even after the latest rate increase.
The central bank raised its policy rate to a 30-year high of 0.75 percent from 0.5 percent earlier in the day. But Ueda said its policy remains accommodative.
As for a neutral interest rate, which neither stimulates nor cools the economy, Ueda reiterated that it is difficult to specify the level in advance but he said the policy rate is still below the neutral range.
“There is some distance to the bottom” of the neutral range, he said.
The BOJ has estimated a neutral interest rate zone of 1.0-2.5%.
“It is appropriate to examine how the economy and prices respond to changes in short-term rates, explore where the neutral rate lies and adjust the degree of monetary accommodation,” Ueda said.
Regarding the pace of future rate increases, Ueda said the bank will examine the impact of each hike on the economy and prices and decide accordingly.