BOJ leaves monetary policy unchanged

Early today, the Bank of Japan anounce no changes to the current monetary policy as expected.

Latter on press conference, governor Kuroda says:

  • still quite a distance to achieve 2% target
  • inflation will rise but still only halfway now
  • BOJ not ready to start discussing exit strategy with low inflation still
  • in theory ETF purchases could drop before 2%
  • no automatic link between ETF and JGB purchases
  • various ways to reduce mon pol easing when it’s time
  • short-term rate, balance sheet a focus when normalizing

Read the complete Statement on Monetary Policy from June 16. > please click here

BOJ leaves rates unchanged

Bank of Japan maintains short-term interest rate target at -0.1% and 10-year JGB yield target around 0.0%. Leaves unchanged pledge to buy JGBs more or less at current pace so its holdings increase at annual pace of around 80 Trl ¥.

Current economic outlook

Japan real GDP expected +1.6% in fiscal year 2017/18 vs +1.5% projected in January

  • real GDP expected +1.3% in fiscal year 2018/19 vs +1.1% projected in January
  • real GDP expected +0.7% in fiscal year 2019/20

Japan core CPI expected +1.4% in fiscal year 2017/18 vs +1.5% projected in January

  • Core CPI expected +1.7% in fiscal year 2018/19 vs +1.7% projected in January
  • Core CPI expected +1.9% in fiscal year 2019/20

Bank of Japan quarterly report: Japan likely to see inflation reach 2% around fiscal 2018

At the press conference latter on, BOJ’s Kuroda says

BOJ will continue with QQE until prices meet inflation target, CPI to hit 2% in fiscal year 2018 and will move stably around that level thereafter. Output gap has turned positive, which helps maintain price momentum. They conclude that exit strategy now will cause market confusion. Kuroda don’t see any problems in purchasing JGBs of around 80trln ¥ per year.

USD/JPY almost unchanged same as policy and it didn’t move much during the both events, currently at 111.27

For full statement on Monetary Policy from April 27. 2017 in PDF, go here