Japan Monetary Policy


Bank of Japan stays put at latest meeting

At its 26 April monetary policy meeting, the Bank of Japan (BoJ) decided to keep its monetary policy unchanged, after the announcement of the world's most aggressive easing program in the previous meeting. The Bank also decided, by a unanimous vote, to conduct money market operations so that the monetary base will increase at an annual pace of between JPY 60 and 70 trillion, in a decision that was in line with market expectations.

According to its bi-annual Outlook for Economic Activity and Prices, the Bank expects to meet its inflation target of 2% by the fiscal year 2015 - which ends in March 2016. However, not all nine policy board members share the same view, as their forecasts for inflation spans from 0.9% to 2.2% for fiscal 2015, with a median projection of 1.9%. Regarding economic developments, the Bank acknowledged that Japan's economy has stopped weakening and is expected to return to a moderate recovery around mid-2013, mainly due to resilient domestic demand. Moreover, the BoJ assumes that overseas economies, including the United States and China, will gradually pick up, although only moderately. On the downside, according to monetary authorities, uncertainties regarding Japan's fiscal sustainability and the European debt crisis remain a threat

A majority of FocusEconomics Consensus Forecasts panellists expect the collateralized overnight call rate to remain unchanged at between 0% to 0.1% this year and next.

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Japan Monetary Policy Chart

Japan Monetary Policy April 2013

Note: Collateralized overnight call rate in %.
Source: Bank of Japan (BoJ).

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