Bank of Japan Monetary Policy Unchanged, Revised CPI and GDP Forecasts Lower As Expected

The Bank of Japan announced no change to monetary policy as widely expected. The BOJ short-term interest target kept at -0.1% and the 10 year JGB yield target remains around 0%. BoJ revised its CPI and GDP forecasts lower.

The Bank of Japan announced no change to monetary policy as widely expected. The BOJ short-term interest target kept at -0.1% and the 10 year JGB yield target remains around 0%. BoJ revised its CPI and GDP forecasts lower.

BOJ kuroda

 BoJ Chief Kuroda

BOJ October 2021 Monetary Policy Decision Statement

 

Highlights

Rates and ETF

  • Bank of Japan short-term interest target kept at -0.1%
  • 10 year JGB yield target remains around 0%
  • ETF buy cap stays at 12tln yen  

BOJ Projection Highlight

  • Core cpi median forecast for fiscal 2021/22 at 0.0% vs +0.6% in July
  • Core cpi median forecast for fiscal 2022/23 at +0.9% vs +0.9% in July
  • Core cpi median forecast for fiscal 2023/24 at +1.0% vs +1.0% in July
  • Real GDP median forecast for fiscal 2021/22 at +3.4% vs +3.8% in July
  • Real GDP median forecast for fiscal 2022/23 at +2.9% vs +2.7% in July
  • Real GDP median forecast for fiscal 2023/24 at +1.3% vs +1.3% in July

BOJ Quarterly report:

Headlines via Reuters

  • Japan’s economy likely to recover, accelerate pace of growth as pandemic’s impact subsides
  • Japan’s consumer inflation likely to gradually accelerate must be vigilant to risks including developments of pandemic, impact on economies
  • Japan’s economy remains in severe state but picking up as a trend
  • Exports, output weak due to supply constraints but increasing as a trend
  • Capex showing weakness in some sectors but picking up as a whole
  • Service spending remains under pressure but consumption showing signs of pickup
  • Japan inflation expectations picking up
  • Exports, output to slow temporarily on supply constraints
  • Signs of improvement likely to spread from corporate to household sector
  • Auto output to slow briefly on supply constraint but solid global it demand to help overall output continue to increase
  • Japan’s financial system stable as a whole
  • Japan’s financial intermediation may stagnate if bank profits come under prolonged pressure from covid-19

 

Source: BoJ

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