By Leika Kihara
TOKYO, March 27 (Reuters) – The Bank of Japan released on Friday an updated estimate on Japan’s natural rate of interest, which showed it in a range of around -0.9% to +0.5%.
The range was largely unchanged from a previous estimate showing Japan’s natural rate of interest in a range of -1.0% to +0.5%.
The natural rate of interest is defined as the level of the real interest rate that is neutral to economic activity and prices, and it is an important concept in the conduct of monetary policy.
“Although the range itself has not changed significantly, a closer look reveals that many of the estimates have recently been moderately on the rise,” reflecting partly an increase in Japan’s potential growth rate, the BOJ said in a staff paper.
Given uncertainty surrounding the estimates of the natural rate, the BOJ would look comprehensively at various data to measure the degree of monetary accommodation, the paper said.
(Reporting by Leika Kihara; Editing by Himani Sarkar and Muralikumar Anantharaman)
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