Key insights
- BOJ Governor Ueda reiterated the continuation of accommodative monetary policy due to negative real interest rates. While increased fiscal spending could potentially crowd out private investment by raising market interest rates, the current accommodative conditions are expected to support a moderate uptrend in private capital expenditure. This stance may lead to a weaker Yen, indirectly impacting global currency markets and potentially putting downward pressure on US equities.
TOKYO, April 9 (Reuters) - Bank of Japan Governor Kazuo Ueda said on Thursday real interest rates are clearly negative and keeping the country’s financial conditions accommodative.
"There is a possibility increased fiscal spending could crowd out private investment by pushing up market interest rates," Ueda told parliament.
"But Japan’s short- and medium-term real interest rates are clearly negative. Such accommodative financial conditions are leading to a moderate uptrend in private capital expenditure," he said.