BANK OF JAPAN KEEPS RATE UNCHANGED FOR THIRD STRAIGHT SESSION

TOKYO, Dec 19 (Bernama-dpa-AFX) -- The Bank of Japan (BoJ) has maintained its key interest rates for the third consecutive session on Thursday as it seeks clarity on spring wage negotiations amidst the uncertainty over US government policies, reported German news agency dpa.

At the policy board meeting, eight out of nine members voted to keep the uncollateralised overnight call rate unchanged at about 0.25 per cent. This rate is the highest since late 2008.

The BoJ, which ended its negative interest rate policy in March and last increased the rate in July, has now tightened its policy twice this year.

Naoki Tamura, a member of the policy board, argued for a 50-basis-points hike. With economic activity and prices aligning with the Bank's outlook, the dissenter noted that risks to prices are now more skewed to the upside. 

BoJ Governor Kazuo Ueda indicated that the bank will need to review various data before making decisions on potential policy easing.

According to Marcel Thieliant, an economist at Capital Economics, the bank is expected to increase rates by 25 basis points at its next meeting in January. Thieliant predicts that rates will rise to 1.25 per cent by the end of 2026, surpassing the 1 per cent peak anticipated by analyst consensus.

In November, core inflation stayed above the 2 per cent target but slowed slightly to 2.3 per cent from 2.4 per cent. 

According to a Capital Economics economist, the upcoming Shunto wage negotiations will lead to another significant wage increase, which will keep services inflation buoyant in the near term. 

The board emphasised the need to pay close attention to developments in financial and foreign exchange markets, considering their impact on Japan's economic activity and prices. 

"In particular, with firms' behaviour shifting more toward raising wages and prices recently, exchange rate developments are, compared to the past, more likely to affect price," the bank stated.

In a policy review released on Tuesday, the bank acknowledged that unconventional measures, including large-scale monetary easing, have their own side effects and caveats. 

"The bank should not exclude at this point any specific measures when considering the future conduct of monetary policy," the BoJ noted.

-- BERNAMA-dpa-AFX