TOKYO (AFX-ASIA) - ING Baring chief economist Richard Jerram said today's action by the Bank of Japan means it will maintain zero interest rates for several years.
"Our forecast is for CPI to stay negative until the middle of 2003, so it looks like we've got zero rates for another couple of years," he said.
"Last time they said they would hold rates until deflationary pressure had dispelled. This time they're clarifying that 'dispelled' means positive CPI," he said. "So we're back to where we were a year ago, except for a bit more certainty."
Jerram added that the central bank has passed the issue of policy back to the politicians that had been calling for additional monetary action.
"The BoJ's done everything it can for now. Now it's up to the politicians," he said. "They can say all right, you've got a volume-based easing, an inflation target and zero rates -- now it's your turn to do something about the banks."