Bank of Japan keeps monetary policy unchanged

RTTNews reports that Japan's central bank maintained its massive monetary policy easing as widely expected, but downgraded its GDP projection for the current fiscal year.

The Policy Board of the BoJ voted 8-1 to retain the interest rate at -0.1 percent on current accounts that financial institutions maintain at the central bank.

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

The bank said that the economy is likely to follow an improving trend with economic activity resuming and the impact of the coronavirus waning gradually. But the pace is forecast to be moderate.

The economy is forecast to shrink 5.5 percent in the fiscal 2020, weaker than the previous outlook of -4.7 percent. Overall consumer prices are expected to drop 0.6 percent versus a 0.5 percent fall projected in July.

The growth outlook for fiscal 2021 was raised to 3.6 percent from 3.3 percent and that for 2022 to 1.6 percent from 1.5 percent.

Consumer prices are projected to rise 0.4 percent in the fiscal 2021 compared to the previous outlook of 0.3 percent. At the same time, the inflation outlook for the fiscal 2022 was retained at 0.7 percent.