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Financial News: BoJ Signals Further Monetary Easing

BoJ Signals Further Monetary Easing

10/31/2019 - 02:51:00 (RTTNews)

(RTTNews) - The Bank of Japan maintained its policy rates on Thursday, but it signaled further monetary easing going forward as the economy is set to expand at a slower pace amid weaker inflation outlook.

The central bank said short and long-term interest rates are expected to remain at their current or lower levels as long as it is necessary to achieve the price stability target.

The announcement came after the US Federal Reserve reduced its interest rate for the third time this year, on Wednesday.

The Policy Board of the BoJ voted 7-2 to maintain interest rate at -0.1 percent on current accounts that financial institutions maintain at the bank.

The bank maintained it yield target for 10-year Japanese government bonds at around zero percent. Further, the bank will purchase JGBs in a flexible manner so that their outstanding amount will increase at an annual pace of about JPY 80 trillion. The decision was widely expected.

Policymakers said there had been no further increase in the possibility that the momentum toward achieving the price stability target would be lost. However, the bank will continue to pay close attention to such possibility.

The bank downgraded its inflation and real growth projections. The real growth forecast for fiscal 2019 was cut to 0.6 percent from 0.7 percent and inflation outlook to 0.7 percent from 1 percent.

Citing the decline in crude oil prices, inflation outlook for fiscal 2020 was lowered to 1.1 percent from 1.3 percent and that for fiscal 2021 was reduced to 1.5 percent from 1.6 percent.

Projected growth rates were lower than previous outlook due to the delay in the timing of a pick-up in the growth pace of overseas economies, BoJ added.

Real GDP is forecast to grow 0.7 percent in fiscal 2020, down from the previous projection of 0.9 percent. Likewise, the outlook for fiscal 2021 was trimmed to 1 percent from 1.1 percent.

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