Bank of Japan "GDP Expected to Decline 4.7% This Year"…Maintains Monetary Easing

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The Bank of Japan (BOJ) forecasted that Japan's gross domestic product (GDP) growth rate will be -4.7% this year, and the inflation rate will be -0.5%. It decided to maintain its large-scale monetary easing policy to prevent an economic recession caused by the novel coronavirus infection (COVID-19).

According to the Nihon Keizai Shimbun and others, the BOJ announced during the two-day Monetary Policy Meeting held until this day that it will maintain the large-scale monetary easing policy that guides the short-term interest rate at -0.1% and the long-term interest rate at 0%.

BOJ policy board members presented a GDP growth rate forecast range of -5.7% to -4.5% for this year in the "Outlook for Economic Activity and Prices" report released on the same day. The statistical median was -4.7%. The GDP growth rate forecast for next year was announced as 3.0% to 4.0% (median 3.3%). The BOJ maintained its existing assessment that the Japanese economy is in a "very difficult state" and expected the economy to gradually recover from the latter half of this year.

This year, the consumer price index (CPI) is expected to be -0.5% (median), and next year it is forecasted to rise by 0.3%.

Earlier, in response to the economic recession caused by the spread of COVID-19, the BOJ removed the limit on government bond purchases and increased the annual limit on exchange-traded fund (ETF) purchases to 12 trillion yen. It also expanded the purchase limits for corporate bonds and commercial paper (CP) to 20 trillion yen to support corporate financing.

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