Tokyo, Japan – The Bank of Japan decided to keep its policy rate unchanged following its monetary policy meeting, maintaining the benchmark policy rate at 0%-0.1%. Economists surveyed by Reuters had anticipated this move, aligning with their expectations. This decision comes after Tokyo reported lower-than-expected inflation figures for April, with the core inflation rate at 1.6% compared to the projected 2.2% from Reuters.
Furthermore, the Bank of Japan stated its intention to continue conducting bond purchases in accordance with the March decision. In March, the bank disclosed that it had previously been buying around six trillion yen ($83.5 billion) worth of bonds monthly. There was no specific mention from the Bank of Japan about the yen, which has shown a steady decline ever since the bank discontinued its negative interest rate policy and abolished its yield curve control policy.
In addition to the policy rate decision, the Bank of Japan also released its second-quarter economic outlook for Japan, revising its forecast for inflation in fiscal 2024. The bank now expects inflation to range between 2.5% and 3% for the fiscal year 2024, an increase from the earlier projection of 2.2% to 2.5% in January.
Looking ahead, the Bank of Japan highlighted the uncertainties surrounding economic and financial developments both domestically and abroad. It emphasized that the conduct of its monetary policy going forward will be contingent on future economic and price conditions. Despite the high levels of uncertainty, the bank affirmed its commitment to maintaining accommodative financial conditions for the foreseeable future.
Moreover, if their forecasts materialize and underlying inflation shows signs of growth, the central bank expressed its readiness to adjust the degree of monetary accommodation accordingly. These strategic decisions and projections underscore the Bank of Japan’s proactive approach to ensuring monetary stability and economic growth in the region. Please check back for updates on this evolving situation.