Bank of Japan retains policy rates as US war on Iran clouds economic outlook

The Bank of Japan maintained its policy rate. This comes to pass after the bank indicated that the economic outlook is clouded by uncertainty surrounding the Middle East crisis.

At the end of a two-day meeting on Thursday, the BOJ maintained its benchmark interest rate at 0.75%, according to a statement. All 51 economists who were polled by Bloomberg were satisfied with the results.

Hajime Takata, who called for a rate increase for the second consecutive meeting, dissented from the central bank's 8-1 vote.

Also Read: Trump threatens to blow up Iran's South Pars natural gas field if Tehran attacks Qatar again

The BOJ is in a precarious situation as a result of the conflict in Iran, since the quickly rising price of oil is expected to fuel inflation before the higher costs spread across the economy and probably hurt consumption and corporate activity.

Without changing its inflation forecast, the central bank added the Middle East to its list of risk factors, indicating that it still believes rates could rise in the upcoming months.

After the BOJ's announcement, the yen remained relatively stable, trading at about 159.60 per dollar. The finance minister issued a further warning after the currency hit 159.90 earlier in the day, hinting at the potential for intervention to stop the trends.

Later on Thursday, BOJ Governor Kazuo Ueda will give a press conference in which he will discuss the decision in more detail and share his thoughts on the direction of interest rates. His meticulous justifications for maintaining policy have occasionally caused the yen to decline, so currency traders will be on edge.