Bank of Japan keeps policy rate; cuts fiscal 2021 growth outlook

RTTNews reports that the Bank of Japan decided to maintain its monetary stimulus unchanged. The bank also lowered its near-term growth outlook citing the impact of the coronavirus pandemic and raised its fiscal 2021 inflation forecast.

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.

The BoJ provided a preliminary outline for a new-funding programme to support efforts in fields related to climate change. The bank plans to launch the measure this year and to continue until March 2031.

The bank downgraded its near-term growth projections. The economy is forecast to expand 3.8 percent in the fiscal 2021 instead of 4 percent estimated in April.

However, the outlook for the fiscal 2022 was lifted to 2.7 percent from 2.4 percent and the estimate for the fiscal 2023 was retained at 1.3 percent.

Citing higher energy prices, the bank expects inflation to rise to 0.6 percent in the fiscal 2021 instead of 0.1 percent projected previously.