The Bank of Japan made public its "Outlook for Economic Activity and Prices" this week. It shows that current Japanese and global economic conditions do not allow BOJ Gov. Mr. Masaaki Shirakawa, who became the central banker April 9, to follow a course of pressing for higher interest rates — as his predecessor Mr. Toshihiko Fukui did.
The biannual report said "downside risks to the economy" stem from uncertainties regarding "future developments in overseas economies and global financial markets as well as the effects of higher energy and material prices." Mr. Shirakawa said, "Economic uncertainty is extremely high."
The report said that given these uncertainties, it would not be appropriate for the central bank to take a particular policy orientation. This means that the BOJ will temporarily freeze the inclination to raise interest rates. The BOJ said it will be flexible in making judgments on monetary policy — a rational approach.