Defying trend, Bank of Japan keeps rates ultra-low

STORY: The Bank of Japan is defying a global trend for raising rates.

On Friday (June 17) it confirmed that rates would stay ultra-low.

That’s despite increases this week from the U.S. Federal Reserve, Bank of England and others.

Governor Haruhiko Kuroda said rates needed to stay low to support the country’s tepid economic recovery from the health crisis:

“We will strive to support the cash flows of companies and maintain stability in the financial market. If necessary, we will not hesitate to take additional monetary easing measures.”

The yen skidded again following the news, tumbling nearly 2% against the dollar.

It’s been battered by the growing difference between rates in Japan and in other major economies.

That’s making imports more expensive for Japanese firms and shoppers.

Kuroda said he was keeping a close eye on foreign exchange markets:

"Recent rapid falls in the yen heighten the uncertainty on the outlook and make it difficult for companies to set business plans. It's therefore negative for the economy and undesirable.”

Last week the government and BOJ issued a joint statement saying they were ready to intervene in currency markets if necessary.

With rate hikes now ruled out, the pressure to act may only increase.