Bank of Japan April Meeting Summary:
- Interest rates left unchanged at -0.10%
- QQE purchases unchanged at 80 trillion yen
- 2017 – 2018 GDP forecasts increased from 1.5% to 1.6%
- 2017 – 2018 (core) inflation forecasts reduced from 1.5% to 1.4%
- Inflation goal expected to be reached by April 2018
As widely expected, the Bank of Japan at its monetary policy meeting today in Tokyo left the interest rates unchanged at -0.10% and also kept the QQE purchases steady at 80 trillion yen.
The policy decision was expected as some BoJ officials commented previously that the central bank would be maintaining its loose monetary policy until it reached the inflation target. Officials embarked on a campaign to highlight the weaker pace of inflation in a bid to quash any speculation of tapering.
At the meeting today, BoJ officials said that inflation was still lagging behind the forecasts it made previously but gave an upbeat view of the economy as the central bank raised the GDP growth forecasts for the current fiscal year.
According to the new economic forecasts, the BoJ expects the real GDP to grow at a pace of 1.6% for the fiscal year 2017 – 2018. This was slightly higher from its previous projections of 1.5% in January this year. The core consumer price index, which excludes the volatile food and energy prices, was forecast to rise 1.4% during the same fiscal year. This was lower than the January’s estimates of 1.5%.
Global demand for exports has managed to support the economy alongside a weaker monetary policy; however, despite years of maintaining an accommodative stance, inflation continues to be the biggest factor for the BoJ which has continued to remain sluggish despite inflation picking up in other economies.
The message from today’s BoJ policy meeting was loud and clear that the central bank has no intentions of tightening monetary policy until inflation started to show signs of strength. The central bank maintained its inflation target of April 2018 which is when the BoJ expects that it will reach its inflation goal.
