Bank of Japan leaves policy unchanged, as widely expected.
BOJ maintains short-term interestst rate target at 0.5%Board’s core CPI fiscal 2025 median forecast at +2.2% vs +2.4% in January
BoJ report: will continue to raise policy rate if economy, prices move in line with its forecast
Japan’s economic growth likely to moderateUnderlying consumer inflation likely to be at level generally consistent with 2% target in second half of projection period from fiscal 2025 through 2027Uncertainty surrounding Japan’s economy, prices remain highMust be vigilant to financial, FX market moves and their impact on economy, pricesRisks to economic outlook skewed to downsideRisks to inflation outlook skewed to downsideJapan’s economy recovering moderately, although some weaknesses are seenReal interest rates are at significant low levelsWill conduct monetary policy as appropriate from perspective of sustainably, stably achieving 2% inflation targetBOJ report on risks: trade policy recently announced in each jurisdiction is likely to push down domestic and overseas economies through various channels.
Introduction of wide-ranging tariffs is expected to impact global trade activity, uncertainties regarding policies including tariffs are likely to have large impact on business, household sentiment, global financial, capital marketsImport prices could rise, and push down domestic demand if disruptions in global logistics were to arise or moves to restructure supply chains were to take place and incur considerable costsBOJ quarterly report: Important for BoJ to carefully examine factors such as developments in economic activity
Important to judge whether the outlook will be realised without any preconceptionExtreme uncertain how trade and other policies in each jurisdiction will evolveUncertain how overseas econimic activities and prices will react to themJapan’s financial system has maintained stability on the wholeIf disruptions in global logistics were to arise or moves to restructure supply chains were to take place and incur considerable costs, import prices could riseThis could in turn push down domestic demandHouseholds’ defensive attitudes toward spending could strengthen further, and this could push down the economyA prolonged period of high uncertainties regarding trade and otherpolicies in each jurisdiction could lead firms to focus more on cost cuttingMoves to reflect price rises in wages could also weaken---
Background to this:
Headlines crossing saying the BoJ is likely to slash its GDP forecasts - from 4 days agoStill to come is Bank of Japan Governor Ueda's press conference at 0630 GMT / 0230 US Eastern time.
This article was written by Eamonn Sheridan at www.forexlive.com. Read More Details
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