A pedestrian walks past the Bank of Japan (BoJ) building in central Tokyo on July 28, 2023.
Richard A. Brooks | Episode | Getty Images
The Bank of Japan kept its policy rate unchanged after its monetary policy meeting on Friday, keeping its policy rate at 0%-0.1%.
This is in line with the expectations of economists polled by Reuters.
While the move was expected, it comes after inflation in Tokyo came in lower than expected in April, with core inflation at 1.6% compared to Reuters expectations of 2.2%.
The BOJ also said it will continue to make bond purchases in line with the March decision. The bank said earlier in March that it had historically bought about six trillion yen ($83.5 billion) worth of bonds per month.
No comment was made by the BOJ on the yenwhich has steadily weakened since the BOJ ended its negative interest rate policy and abolished its yield curve control policy last month.
The currency broke through the 156 mark against the US dollar on Friday after the decision, most recently trading at 156.11.
In addition, the central bank also published its second-quarter outlook for the Japanese economy, raising its outlook for inflation in the 2024 fiscal year.
The BOJ now expects inflation for fiscal 2024 to be between 2.5% and 3%, up from 2.2% to 2.5% in its January forecast.
Inflation is forecast to slow to “around 2%” in fiscal 2025 and 2026, the bank added.
The BOJ also lowered gross domestic product growth forecasts for fiscal 2024 to a range of 0.7% to 1%, down from January’s forecast of 1% to 1.2% growth.
Accommodative policies remain in place
In light of the outlook report, the BOJ said the conduct of its monetary policy going forward will depend on future developments in economic and price conditions. But it is said that accommodative financial conditions will be maintained ‘for the time being’.
The BOJ does acknowledge that the uncertainties surrounding these economic and financial developments at home and abroad remain significant. But if its forecasts come true and underlying inflation rises, the central bank says it will “adjust the degree of monetary easing.”
This is the latest news. Check back later for updates.