As expected, the Bank of Japan left its benchmark interest
rate unchanged at its latest meeting. The current rate of .5% remains the lowest in
the industrialized world and thus will continue to fuel the Japanese carry
trade. The Bank fended off the criticism
of several European Ministers, wary of the Yens continued appreciation against
the Euro, including a 5% increase in the last month alone. The EU has insisted that Japan should
hike rates immediately both to avoid global economic imbalances and to prevent its
own economy from overheating. Japan defended
its decision by pointing to certain small business indicators, which suggest
the sector is still underperforming. Carry
traders, rest easy. Bloomberg News
reports:
The Bank of Japan will probably need to put off a hike at
least until December to nail down its assessment of global growth as well as
the performance of small companies, said Masaaki Kanno, a former central bank
official
Read More: Bank of Japan Votes 8-1 to Keep Key Rate at 0.5%
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