In a widely anticipated decision, the Bank of Japan (BOJ) has opted to maintain its policy interest rate at 0-0.1% during its meeting on April 26, aligning with economists’ expectations following the previous interest rate hike in March.
During the meeting, the BOJ provided an outlook indicating that Japan’s inflation is projected to remain at the central bank’s target level of 2% until fiscal year 2026. Notably, for the current fiscal year beginning in April 2024, the Core Consumer Price Index (Core CPI), excluding fresh food prices, is expected to witness a 2.8% increase, surpassing the earlier forecast of 2.4%.
Furthermore, the BOJ affirmed its commitment to continue bond purchases, a measure consistent with the decisions made during the March meeting.
The BOJ’s Policy Committee also conducted an assessment of the impact of the previous decision to raise short-term interest rates, a move considered a significant shift in monetary policy. This decision follows years of implementing a special monetary easing policy, which diverged from the approaches adopted by other countries around the globe.
The BOJ’s decision to maintain interest rates reflects its cautious approach to balancing economic stabilization and inflation management. With an eye on achieving and sustaining the target inflation rate, the central bank aims to support Japan’s economic recovery while ensuring stability in the financial markets. As the global economic landscape continues to evolve, the BOJ remains vigilant in navigating the complexities of monetary policy to foster sustainable growth and price stability.