BoJ Leaves Policy Unchanged; Raises Growth Outlook
The Bank of Japan decided to maintain its monetary policy
unchanged on Thursday, but raised the growth projections, citing
the impetus from the fiscal stimulus measures.
The board voted 7-1 to retain the interest rate at -0.1 percent
on current accounts that financial institutions maintain at the
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.
Markets had expected the bank to keep monetary policy unchanged
ahead of the policy review in March.
The BoJ is likely to keep both its short-term policy rate as
well as its target for 10-year JGB yields unchanged for the
foreseeable future, Marcel Thieliant, an economist at Capital
In its quarterly Outlook for Economic Activity and Prices
report, released today, the bank said compared to October, the
projected growth rates were somewhat higher, mainly for fiscal
2021, reflecting the effects of the government's economic measures
The outlook is based on the assumption that the impact of the
pandemic will wane gradually and then almost subside toward the end
of the projection period.
The bank lifted the fiscal 2021 GDP growth outlook to 3.9
percent from 3.6 percent. Likewise, the growth projection for the
fiscal 2022 was raised to 1.8 percent from 1.6 percent.
The projected rates of increase in the CPI were more or less
The BoJ expects consumer prices to rise 0.5 percent in the
fiscal 2021 instead of 0.4 percent forecast in October. At the same
time, inflation outlook for the fiscal 2022 was retained at 0.7
For the fiscal 2020, the bank projected an economic contraction
of 5.6 percent versus prior forecast of -5.5 percent. Consumer
prices were expected to drop 0.5 percent compared to -0.6 percent
estimated in October.
The bank noted that risks to both economic activity and prices
were skewed to the downside, mainly due to the impact of