October 28, 2021

As Expected, BOJ Monetary Policy Unchanged

 The Central Bank of Japan (BOJ) remains unchanged with monetary policy and forecasts inflation to remain below its 2% target for at least another two years, signaling it will continue to lag behind other central banks in re-tightening policy.

As expected by the market, interest rates remained unchanged at lows at -0.10% and the 10 -year government bond yield target was also set at around 0%.

Rising commodity prices have pushed Japanese inflation to a 13 -year high in September. However, consumer spending was very slow due to sluggish domestic demand, keeping the consumer price index stuck at zero.

This makes Japan a country that lags behind other major economies, especially as rising global inflationary pressures prompt more central banks to consider withdrawing their coronavirus stimulus.

Moreover, the BOJ also lowered its forecast for the country’s growth but maintained its assessment that the world’s third -largest economy is heading towards a modest recovery.

The reduction in Japan’s economic growth projections was made in line with weak consumption rates and the impact on factory production due to global supply disruptions.