BoJ left monetary policy unchanged at widely expected. Under the yield curve control framework, short term policy interest rate is kept at -0.1%. BoJ will also continue to by JGBs, without upper limit” to keep 10-year yields at around 0%. Goushi Kataoka dissented in the 8-1 vote again, pushing for further strengthening of easing.
In the Outlook for Economic Activity and Prices report, BoJ said the economy is “likely to follow an improving trend with economic activity resuming and the impact of the novel coronavirus (COVID-19) waning gradually”. But, “the pace is expected to be only moderate while vigilance against COVID-19 continues.”
Year-on-year core CPI rate is “likely to be negative for the time being” mainly affected by COVID-19, the past decline in crude oil prices, and the “Go To Travel” campaign. Growth projections for fiscal 2020 was revised lower “mainly due to a delay in recovery in services demand”. But overall outlook is “extremely unclear”, with risks to both activity and prices “skewed to the downside”.
Median GDP forecasts:
- Fiscal 2020 revised down to -5.5% (from -4.7%)
- Fiscal 2021 revised up to 3.6% (from 3.3%).
- Fiscal 2020 revised up to 1.6% (from 1.5%).
Media core CPI forecasts:
- Fiscal 2020 revised down to -0.7% (from -0.6%).
- Fiscal 2021 revised up to (0.4% (from 0.3%).
- Fiscal 2022 unchanged at 0.7%.
