Bank of Japan retains monetary stimulus

RTTNews reports that the Bank of Japan maintained its monetary stimulus unchanged, as widely expected. The bank downgraded its near-term inflation forecast and raised its growth projections despite the restrictions related to COVID-19 pandemic.

The board voted 8-1 to hold the interest rate at -0.1 percent on current accounts that financial institutions maintain at the central bank.

The bank will continue to purchase a necessary amount of Japanese government bonds without setting an upper limit so that 10-year JGB yields will remain at around zero percent.

According to the quarterly Outlook for Economic Activity and Prices report, the economy will recover, with the impact of the novel coronavirus waning gradually and supported by an increase in external demand, accommodative financial conditions, and the government's economic measures.

For the fiscal 2021, the bank expects 4 percent real growth instead of 3.9 percent estimated in January.

Citing stronger domestic and external demand, the growth projection for the fiscal 2022 was raised to 2.4 percent from 1.8 percent. Thereafter, growth is seen easing to 1.3 percent in the fiscal 2023.

The bank lowered its inflation forecast for the fiscal 2021 to 0.1 percent from 0.5 percent but lifted its outlook for the fiscal 2022 to 0.8 percent from 0.7 percent. Consumer prices are forecast to rise 1 percent in the fiscal 2023.