Japan Monetary Policy


Japan: Bank of Japan stays put at January's meeting

January 22, 2014

At its 20-21 January monetary policy meeting, the Bank of Japan (BoJ) decided to keep its stance on monetary policy unchanged. The Bank also unanimously decided to continue implementing money market operations so that the monetary base - its main policy instrument - would increase at an annual pace of between JPY 60 and 70 trillion (approximately USD 575 and 670 billion). This decision, which was in line with market expectations, is aimed at achieving the price stability target of 2.0%.

In its accompanying statement, the Central Bank stated that the economy, "has continued to recover moderately," and that, "a front-loaded increase in demand prior to the consumption tax hike has recently been observed." In terms of price developments, the Bank stated that annual inflation is on an upward trend and that it is expected to hold steady around 1.25% for some time (excluding the direct effects of the tax hike). The next monetary policy meeting is scheduled for 17-18 February.

All of the FocusEconomics Consensus Forecasts panelists expect the collateralized overnight call rate to remain unchanged at between 0.0% and 0.1% in 2014 and 2015.

FocusEconomics Consensus Forecast panelists expect the yen to trade at 110.5 per USD by the end of this year. For 2015, the panel projects the yen to weaken further to 114.1 per USD.


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Japan Monetary Policy Chart

Japan Monetary Policy January 2014

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

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