Bank of Japan Makes No Change in Monetary Policy but Revised Projected Growth Higher

April 27, 2021

This month’s meeting of the Bank of Japan Policy Board coincides with an updated publication of the Outlook for Economic Activity and Growth. The settings of the “Quantitative and Qualitative Easing with Yield Curve Control” was introduced initially in September 2016. The targets are -0.1% for short-term interest rates, “around zero percent give-or-take 50 basis points” for the 10-year JGB yield, and an overarching goal of continuing the heavy stimulus until core inflation exceeds 2.0% and is perceived likely to stay above that target in a stable manner. The interest rate targets and guidelines for asset purchases and corporate pandemic relief were not changed, and dovish board member Kataoka again dissented from the 8-1 decision, seeking even more support than being done presently. A sign of the elusive nature of the inflation target was embodied in the revision of projected core CPI inflation this fiscal year to 0.1% from 0.5% projected three months ago. Inflation forecasts for fiscal 2022 and fiscal 2023 of 0.8% and 1.1% were also considerably short of target. Furthermore, Governor Kuroda suggested that full achievement of the inflation goal probably will not occur in fiscal 2024 either.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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