Overview
- The Bank of Japan’s short-term policy rate remains at 0.5% as officials weigh their next move.
- Kazuo Ueda said the board will consider the pros and cons of a rate increase at the next meeting, signaling a strong chance of a step to 0.75% this month.
- The BOJ’s internal work currently places Japan’s nominal neutral rate in a broad 1% to 2.5% range.
- Ueda emphasized that the neutral rate cannot be observed directly and shifts with structural factors such as productivity.
- He said monetary policy must proceed without a clear terminal level because the neutral-rate estimate is still too wide.