BoJ kept monetary policy unchanged today as widely expected. Under yield curve control, short term policy rate is kept at -0.1%. BOJ will also continue to purchase a “necessary amount”, “without setting an upper limit”, to to keep 10-year JGB yields at around 0%. The decision was made by 8-1 vote, With Goushi Kataoka dissented, pushing to ease further by lowering short- and long-term interest rates.
On outlook, BOJ said the economy is “likely to remain in a severe situation for the time being”. CPI is likely to be “negative for the time being”, affected by the coronavirus pandemic and decline in oil prices. But it’s expected to “turn positive and then increase gradually” as the economy improves.
On risks to outlook, BoJ said “there have been extremely high uncertainties over the consequences of COVID-19 and the magnitude of their impact on domestic and overseas economies”. Also, “it is necessary to pay close attention to whether, while the impact of COVID-19 remains, firms’ and households’ medium- to long-term growth expectations will not decline substantially and the smooth functioning of financial intermediation will be ensured with financial system stability being maintained.”
