BOJ maintains monetary policy as expected and raises inflation forecast to 2.3% this year

The Bank of Japan (BOJ) has maintained its ultra-loose monetary policy in line with expectations, while the BOJ has raised its inflation forecast for this year as energy costs soar and the yen weakens.

The Board of the BOJ decided to keep the policy rate at -0.1% and the target yield on 10-year government bonds at around 0% to support the economic recovery. The BOJ continues to keep the ceiling for the yield on 10-year government bonds at no more than 0.25%, although investors expect the BOJ to adjust its monetary policy. The reason was that the accommodative monetary policy had led to a sharp decline in the yen.

At the meeting, the BOJ raised its inflation forecast for fiscal year 2022, stating that the core consumer price index (excluding prices for basic foodstuffs) would rise by 2.3%, above the previous forecast of 1.9%.

In addition, the BOJ lowered its economic growth forecast for 2022 from 2.9% to 2.4% as the war between Russia and Ukraine and supply chain bottlenecks continue to weigh on the economy.

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