The Bank of Japan (BoJ) announced its decision after a 2-day monetary policy meeting. According to the decision of policymakers with 7 votes to 2, the Bank did not change the benchmark interest rate and left it at minus 0.1 percent. Maintaining its commitment to keep its 10-year bond yield at 0 percent, the Bank continued its annual 80 trillion yen bond buying program.

Stressing that the BoJ will continue its monetary expansion policy until reaching the inflation target of 2 percent, according to the report published on the Bank’s official website. As for the policy rates, the Bank expects short- and long-term interest rates to remain at their present or lower levels as long as it is necessary to pay close attention to the possibility that the momentum toward achieving the price stability target will be lost. It will examine the risks considered most relevant to the conduct of monetary policy and make policy adjustments as appropriate, taking account of developments in economic activity and prices as well as financial conditions, with a view to maintaining the momentum toward achieving the price stability target. In particular, in a situation where downside risks to economic activity and  prices, mainly regarding developments in overseas economies, are significant, the Bank will not hesitate to take additional easing measures if there is a greater possibility that the momentum toward achieving the price stability target will be lost.”

The report, which includes the evaluations and expectations regarding the economic outlook of BoJ, predicted that the Japanese economy continued to grow moderately and that the circulation of around 0.5 percent would gradually accelerate towards 2 percent. In the report, which emphasized that the Japanese economy is likely to face the effect of the global slowdown for a while, it was stated that the acceleration of reaching the inflation target continues but there is no strengthening of the momentum and inflation expectations were revised downwards due to the decrease in oil prices. Accordingly, the Bank reduced its inflation expectations from 0.7 percent to 0.6 percent for 2019, from 1.1 percent to 1.0 percent for 2020, and from 1.5 percent to 1.4 percent for 2021. In addition, the Bank increased its growth expectation from 0.6 percent to 0.8 percent for 2019, from 0.7 percent to 0.9 percent for 2020, and from 1.0 percent to 1.1 percent for 2021.

Governor Haruhiko Kuroda, at the press conference, said that there were downside risks due to overseas factors, but these risks decreased slightly with the trade agreement between the USA and China. Underlining that maintaining the inflation target in the long term supports the stabilization of the rate. He further added, “We should pay attention to the side effects caused by the monetary policy. Currently, the benefits provided by our current monetary policy outweigh the costs arising from this. When we look at it, we do not see a change in the price trend. It is moving towards our target of 2 percent. Growth will contribute to inflation with a delay for a while, but strong relaxation policies will continue in line with the price target. Therefore, it is early to regulate the monetary policy stance right now. we do not hesitate “.


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