Bank of Japan Maintains Ultra-Loose Policy and Adjusts Core Inflation Forecast

Bank of Japan Retains Ultra-Loose Monetary Policy

The Bank of Japan has confirmed its decision to retain its ultra-loose monetary policy at the initial meeting of the year, simultaneously revising its core inflation forecast for the upcoming fiscal year. The unanimous decision to uphold interest rates at -0.1% was accompanied by the continuation of the yield curve control policy, which sets the upper limit for the 10-year Japanese government bond yield at 1%. This comes as part of the BOJ's latest policy statement released on Tuesday.

Defiance of Expectations

Defying the expectations of all economists surveyed by Reuters, the Japanese central bank remains the sole institution globally to uphold negative rates. Governor Kazuo Ueda, in a speech last December, conveyed a dovish outlook, which sets the tone for the continued pursuit of an accommodative monetary stance.

Revised Inflation Forecasts

During the quarterly outlook on the Japanese economy, BOJ board members opted to lower their median projection for core consumer price growth to 2.4% for fiscal 2024, commencing in April, in contrast to the previous estimate of 2.8% made in October. Additionally, the central bank made a slight upward adjustment to the core CPI inflation forecast for fiscal 2025, revising it to 1.8% from the earlier 1.7% projection. As developments unfold, stay tuned for further updates on this ongoing story.