A pedestrian walks past the Bank of Japan (BoJ) building in central Tokyo on July 28, 2023.
Richard A. Brooks | Afp | Getty Images
The Bank of Japan kept its key interest rate unchanged on Friday after its monetary policy meeting, maintaining its benchmark policy rate at 0%-0.1%.
That is in line with the expectations of economists polled by Reuters.
While the move was expected, this comes after Tokyo’s April inflation came in lower than expected, with the core inflation rate at 1.6%, compared with 2.2% expectations from Reuters.
The BOJ also said it will continue to conduct bond purchases in line with the March decision. The bank said earlier in March that it previously bought about six trillion yen ($83.5 billion) of bonds a month.
The BOJ has not commented on the yen, which has been steadily weakening since the BOJ ended its negative interest rate policy last month and scrapped its yield curve control policy.
The currency broke through the 156 mark against the US dollar on Friday following the decision, last trading at 156.11.
Separately, the central bank also released its second-quarter outlook for Japan’s economy, raising its outlook for inflation in fiscal 2024.
The BOJ now expects inflation to be between 2.5% and 3% for fiscal 2024, up from 2.2% to 2.5% in the January forecast.
Inflation is then forecast to ease to “around 2%” in fiscal 2025 and 2026, the bank added.
The BOJ also downgraded gross domestic product growth forecasts for fiscal 2024 to a range of 0.7% to 1%, down from January’s prediction of 1%-1.2% growth.
In light of the outlook report, the BOJ said that going forward, the implementation of its monetary policy will depend on future developments in economic conditions and price conditions. But it said accommodative economic conditions will be maintained “for now.”
The BOJ recognizes that the uncertainty surrounding this economic and financial development at home and abroad remains high. But if its forecasts are realized and underlying inflation rises, the central bank said it will “adjust the degree of monetary accommodation.”
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