Bank of Japan maintains rates and increases its economic growth forecasts
The BOJ keeps its short-term interest rate target at -0.1 per cent and pledges to guide 10-year government bond yields to around zero
The Bank of Japan (BOJ) has kept monetary policy steady and increased its economic growth forecasts as the government’s optimism over the global outlook eased the pressure on the central bank.
The BOJ also signalled cautious optimism over the global economy after the US and China agreed on a preliminary deal to defuse their trade war, saying that risks surrounding the outlook have subsided.
The Bank kept its short-term interest rate target at -0.1 per cent and a pledge to guide 10-year government bond yields around 0 per cent.
It also maintained the guidance that commits to it keeping rates at current low levels, or to cutting them, until risks keeping it from achieving its two per cent inflation goal fade.
In a quarterly review of its forecasts, the BOJ revised its growth projection for the fiscal year beginning in April to 0.9 per cent from an estimate growth of 0.7 per cent made in October, helped by a boost from the government’s fiscal stimulus package.
It also upgraded its growth estimate for fiscal 2021, but largely maintained the price forecasts that show inflation missing its 2 per cent target through early next year.
“Japan’s economy is likely to continue expanding moderately as a trend,” it said, adding that the impact of slowing global growth on domestic demand will be limited.
Markets will now scrutinise BOJ Governor Haruhiko Kuroda’s post-meeting briefing for clues on how his views on the advantage and disadvantages of his stimulus could affect policy decisions this year.