TOKYO: The Bank of Japan raised its inflation forecast on Thursday (Jul 21), but maintained ultra-low interest rates and warned of risks to the economic outlook in a sign it will remain an outlier among a global wave of central banks tightening monetary policy.
“For the time being, while closely monitoring the impact of COVID-19, the bank will support financing … and will not hesitate to take additional easing measures if necessary,” the BOJ said in a statement announcing the decision.
As widely expected, the BOJ kept unchanged its -0.1 per cent target for short-term interest rates, and 0 per cent for the 10-year government bond yield by an 8-1 vote.
In fresh quarterly projections, the BOJ raised its core consumer inflation forecast for the current fiscal year ending in March 2023 to 2.3 per cent from 1.9 per cent projected in April.
It expects core consumer inflation to hit 1.4 per cent in fiscal 2023, compared with 1.1 per cent in April.
The board cut its economic growth forecast for the current fiscal year to 2.4 per cent from a 2.9 per cent rise seen three months ago.