Bank of Japan

January 18, 2022

The Bank of Japan Board, which held its first scheduled policy review of 2022 yesterday and today has as yet not plan or inclination to debate whether and when to start raising its rates. According to the Board’s latest statement, the short-term interest rate will remain at -0.10%, and quantitative stimulus will continue with the goal of keeping Japan’s ten-year JGB yield “around zero percent.” A sole dissenting vote by Mr. Kataoka urged adopting even greater stimulus. In the accompanying quarterly Outlook for Economic Activity and Prices, officials collectively promised to “closely monitor the impact of COVID-19 and” pledged “not to hesitate to take additional easing measures if necessary… Also they expect short- and long-term policy interest rates to remain at their present or lower levels.” The strongly reaffirmed “promise to continue expanding the monetary base until the year-on-year rate of increase in the observed CPI (all items less fresh food)exceeds 2 percent and stays above the target in a stable manner” was made in spite of upward revisions in the bank’s projections of GDP growth and core CPI inflation next fiscal year. The growth forecast was increased to 3.8% from 2.9% projected back in October, and core CPI was bumped up to 1.1% from 0.9%.

Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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