The Bank of Japan Stayed on Hold As Expected, USD/JPY Rose Above 156.00

The Bank of Japan decided to keep its key interest rate unchanged at 0.0% after its April meeting on Friday.

The resolution was in line with market expectations. In March, the central bank raised interest rates for the first time since 2007, ending an era of negative interest rates that began in 2016.

Bank of Japan Monetary Policy Statement

In its statement, the BOJ removed a reference to its current monthly purchases of about 6 trillion yen worth of Japanese government bonds.

Purchases of Japanese government bonds, chlorinated paraffins and corporate bonds will be based on a decision to be made in March 2024.

The Bank of Japan makes a unanimous decision through market operations.

Bank of Japan quarterly outlook report

Japan’s economy is recovering modestly, but there are still some weaknesses.

Inflation expectations rose modestly.

As the positive cycle gradually strengthens, the Japanese economy is likely to continue growing above potential.

Consumption may gradually increase.

Underlying inflation is likely to gradually rise towards boj’s price target.

In the second half of the forecast period, price levels are likely to be broadly consistent with the price stability target.

Uncertainty about Japan’s economic and price outlook is extremely high.

The risks facing the economy are generally balanced.

Inflation risks are biased to the upside in FY24 but generally balanced thereafter.

The output gap has improved and may gradually widen.

More companies are beginning to pass on wage increases to sales prices.

The virtuous cycle of rising wages and inflation is expected to continue to strengthen.

One must remain vigilant about foreign exchange, market movements and their impact on the economy and prices.

Japanese asset markets and financial institutions did not act excessively.

If inflation trends higher, the Bank of Japan may adjust the degree of monetary easing.

Loose monetary policy is expected to continue for some time.

From the perspective of stably and sustainably achieving price targets, monetary policy will be implemented appropriately based on the development of the economy, prices, and finance.

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