BOJ Holds Monetary Policy Steady... Downgrades Economic Growth and Inflation Forecasts for This Year

Bank of Japan Headquarters [Photo by Reuters Yonhap News]

[Asia Economy Reporter Park Byung-hee] The Bank of Japan (BOJ), Japan's central bank, has kept its benchmark interest rate unchanged and downgraded its economic growth and inflation forecasts for this year, major foreign media reported on the 28th (local time).

The BOJ concluded its two-day monetary policy meeting on the day and kept the short-term interest rate at -0.1%. It also decided to maintain its large-scale monetary easing policy of purchasing long-term government bonds without an upper limit, targeting a 0% yield on 10-year government bonds. With the House of Representatives election scheduled for the 31st and the possibility of an economic slowdown, it appears the BOJ chose to maintain its existing accommodative monetary policy stance.

In its "Outlook for Economic Activity and Prices" report, the BOJ forecasted the real gross domestic product (GDP) growth rate for the current fiscal year at 3.4%, lowering it by 0.4 percentage points from the July forecast. The inflation forecast was also revised down from 0.6% in July to 0.0%.

This downgrade in economic growth and inflation forecasts is analyzed to reflect the impact of the surge in COVID-19 cases and supply chain disruptions last summer.

Instead, the BOJ raised the economic growth forecast for the 2022 fiscal year from 2.7% to 2.9%. Meanwhile, the inflation forecast remained unchanged at 0.9%.

The economic growth and inflation forecasts for the 2023 fiscal year were maintained at 1.3% and 1.0%, respectively.

This content was produced with the assistance of AI translation services.