BoJ kept its uncollateralized overnight call rate unchanged at around 0.50%, as widely expected.
In its statement, BoJ noted that growth is expected to remain above potential, while inflation progress remains on track toward its 2% target. However, policymakers flagged high levels of uncertainty, particularly citing global trade tensions and policy shifts in major economies as key risks.
A notable shift in BoJ’s tone was its heightened focus on exchange rate movements as a key factor influencing inflation. The central bank acknowledged that with firms increasingly raising wages and prices, exchange rate developments are, compared to the past, “more likely to affect prices”.
This suggests that further depreciation in Yen could accelerate price increases, and influence future monetary policy decisions.
