BoJ left monetary policy unchanged as widely expected. Under the yield curve control framework, short-term policy rate is kept at -0.1%. The central bank will continue JGB purchases to keep 10-year yield at around 0%. Annual monetary base expansion will be kept at around JPY 80T.
On the outlook, BoJ expects that the economy is “likely to continue on a moderate expanding trend, despite being affected by the slowdown in overseas economies”. Domestic demand is “expected to follow an uptrend”. Exports are “projected to show some weakness”, but still be on a “moderate increasing trend”. CPI is likely to increase “gradually toward 2 percent”.
Risks include US macroeconomic policies, protectionism, emerging markets, global adjustments in IT goods, Brexit and geopolitical risks. BoJ warned that “downside risks concerning overseas economies seem to be increasing, and it also is necessary to pay close attention to their impact on firms’ and households’ sentiment in Japan.”
