BoJ left monetary policies unchanged as widely expected. Short term policy interest was held at -0.10%. BoJ will also continue with JGB purchase to keep 10 year yield at around 0%, but allow it to “move upward and downward to some extent”. Annual pace of monetary base expansion is kept at JPY 80T. The decision was made by 7-2 vote. Harada opposed again on allowing yield to move in a range as that’s “too ambiguous” as guideline. Kataoka continued his push to “strengthen monetary easing”.
The central bank expected the economy to “continue its moderate expansion”. Domestic demand is likely to “follow an uptrend”. Exports are expected to continue the “moderate increasing trend”. CPI is “likely to increase gradually toward 2 percent, mainly on the back of the output gap remaining positive and medium- to long-term inflation expectations rising”
Risks to outlook include US macroeconomic policies, consequences of protectionist moves, developments in emerging and commodity-exporting economies, Brexit and geopolitical risks.
