Bank of Japan Keeps Interest Rates Unchanged

Japan stock market traded low as the yen surged after the Bank of Japan decided against any extra monetary easing.

The Bank of Japan (BoJ) kept interest rates unchanged despite coming under pressure to take further action.

The central bank had introduced negative rates in January but this failed to provide a much needed boost for the economy.

The Nikkei 225 index finished 3.6% lower at 16,666.05. New economic data also showed a slip back into deflation while industrial production expanded.

Japan has for years been trying to boost its economy and end a period of stifling deflation.

One way to try to achieve this is by monetary policy, which is one of PM Shinzo Abe’s three key “Abenomics” policies to turn around the economy.

However, even negative rates – meaning commercial banks will be charged if they deposit money with the central bank – have not trickled down to get banks to lend more and companies and people to invest or spend more.

Inflation is still far off the 2% target.

The BoJ’s decision to hold rates also sent the yen currency soaring, which is likely to have a negative effect on the crucial export sector.

The yen rose nearly 2% against the dollar, with one dollar worth 109.33 yen.