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Bank of Japan to review June interest rate

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Bank of Japan to review June interest rate

The Bank of Japan
Photo: Shinji Kita/AP

The Bank of Japan (BOJ) will meet today to begin its two-day, June interest rate review.

At a meeting in late May, the BOJ left its short-term interest rate unchanged at -0.1% and bolstered its loan support program—now worth approximately $700 billion. After the Japanese economy slipped into a recession earlier this year, the BOJ injected cash into its banking sector and imposed a stiff ceiling on interest rates, in hopes of sustaining struggling sectors like retail and the auto industry.

The BOJ will likely forgo bold monetary adjustments at today’s meeting, as the bank and government have already unveiled expansive loan support measures and plans to boost bond purchases through March 2021. The bank’s sub-zero rate strategy may generate pushback from commercial lenders, whose profit margins have suffered amidst increasing tension between policymakers and private banking executives.

Experts warn that the nation’s economy still faces formidable barriers to recovery, such as ballooning unemployment, which could push the BOJ to loosen its monetary policy in the near future if it refrains from modification this week—perhaps by reconsidering its approach of tying policy to a 2% inflation target.

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