Japan Monetary Policy


Bank of Japan stays put at latest meeting

At its 22 May monetary policy meeting, the Bank of Japan (BoJ) decided to maintain its monetary policy unchanged, after the announcement of the world's most aggressive easing program in April. The Bank also decided, by a unanimous vote, to conduct money market operations so that the monetary base - the main policy instrument - will increase at an annual pace of between JPY 60 and 70 trillion (approximately between USD 585 and 682 billion), in a decision that was in line with market expectations. In its accompanying statement, the Central Bank upgraded its view on the economy and now affirms that the economy has "started picking up", whereas in its previous statement, the BoJ believed that the economy had "stopped weakening". On the external from, the Bank stated that overseas economies started to move out from a deceleration phase. Regarding price developments, the Bank acknowledged that some indicators pointing to a rise in inflation expectations. Remarkably, the Bank of Japan did not make any reference to either the recent jitters in the bond market or the sharp depreciation of the Japanese yen. According to some analysts, the BoJ is not yet concerned about the recent jump in bond yields, while is not expected that the Central Bank will explicitly mention the exchange rate in order to avoid accusations of currency manipulation. A majority of FocusEconomics Consensus Forecasts panellists expect the collateralized overnight call rate to remain unchanged at between 0% and 0.1% this year and next.

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Japan Monetary Policy Chart

Japan Monetary Policy May 2013

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

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