Bank of Japan Raises Growth Forecast by 0.2%P This Year... Keeps Benchmark Interest Rate Unchanged

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The Bank of Japan (BOJ) announced on the 21st that it would keep the benchmark interest rate (short-term policy rate) unchanged and revised upward its forecast for this year's real Gross Domestic Product (GDP) growth rate by 0.2 percentage points to 0.9%.

According to the Nihon Keizai Shimbun and others, the BOJ decided at the monetary policy meeting held that day to maintain its existing monetary easing policy. Accordingly, the BOJ will continue its interest rate policy of guiding the short-term policy rate at minus (-) 0.1% and the long-term interest rate (10-year government bond yield) at around 0%.

The BOJ also adjusted its forecast for this year's real GDP growth rate and raised the GDP growth rate forecasts for 2019?2021 by 0.1 to 0.2 percentage points compared to previous estimates. The BOJ pointed out that last year, overseas economic slowdown and typhoon damage weakened corporate exports and production, and there were some sudden changes in demand following the consumption tax rate hike.

However, regarding the domestic Japanese economy, the BOJ maintained its existing view that it is "expanding moderately." Considering the government's economic measures, including future typhoon damage recovery plans, the BOJ decided to assess future economic trends accordingly. Regarding the overseas economy, although there is a trend of economic slowdown, the BOJ maintained the view that overall growth is moderate.

Furthermore, the BOJ emphasized that if concerns grow over a slowdown in the inflation trend, it will implement additional monetary easing measures.