Bank of Japan keeps monetary policy unchanged, expects inflation to rise and moderate economic growth

Tokyo, April 26, 2024: The Bank of Japan (BoJ) kept its monetary policy unchanged today, leaving its key overnight interest rate in the -0.1% to 0% range. The bank also raised its inflation forecasts and slightly lowered its economic growth expectations for 2024.

Rising Inflation:

The BoJ now expects inflation in Japan to reach 2.8% in 2024, up from its previous forecast of 2.4%. The bank attributes the rise in inflation to soaring energy prices and the waning effects of government stimulus measures. In subsequent years, the bank expects inflation to moderate slightly, forecasting 1.9% in 2025 and 1.9% in 2026.

Moderate Economic Growth:

The BoJ slightly lowered its economic growth forecast for 2024 to 0.8%, down from its previous forecast of 1.2%. For 2025 and 2026, the bank expects growth to remain at 1%, in line with its previous estimates.

End of Easy Monetary Policy:

In March 2024, the BoJ ended its ultra-easy monetary policy and raised its key interest rate for the first time in 17 years. This modest tightening of monetary policy is aimed at helping to curb rising inflation.

Challenges for the BoJ:

The BoJ faces a challenging task of balancing support for economic growth with curbing inflation. Soaring energy prices and a weakening yen are putting upward pressure on inflation, while a slowdown in the global economy poses a risk to Japan’s economic growth.

Next Steps:

The BoJ will closely monitor inflation and economic developments and will adjust its monetary policy as needed. The bank is expected to further elaborate on its forecasts and strategies at its next monetary policy meetings in June and September 2024.

Source: peniaze24