By Megumi Fujikawa
TOKYO (Dow Jones) – The Bank of Japan (BoJ) has left its monetary policy unchanged and has also confirmed its view that the country’s economy is gradually recovering from the effects of the coronavirus pandemic. However, she underlined that she would take further action should this become necessary. “Japan’s economy is likely to follow an upward trend with the resumption of economic activity and the gradual weakening of the effects of Covid-19,” the central bank writes in its quarterly outlook.
The BoJ assumes that the gross domestic product in the fiscal year to the end of March 2021 will shrink by 5.5 percent. In July, the forecast was minus 4.7 percent. In the following years growth rates of 3.6 (July forecast: 3.3) percent and 1.6 (1.5) percent are expected.
The Bank of Japan’s inflation forecast shows that prices are likely to remain well below their 2 percent target for at least the next two years. Core inflation excluding fresh food is expected to be 0.7 percent in the fiscal year of March 2023, but will be minus 0.7 (minus 0.6) percent in the current year. The BOJ has kept its target for short-term interest rates at minus 0.1 percent and its target for the yield on ten-year Japanese government bonds at around zero. It also confirmed its annual target for purchases of exchange-traded funds (ETFs) of 12 trillion yen and the limit for purchases of commercial paper and corporate bonds of 20 trillion yen.
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DJG / DJN / smh / cbr
(END) Dow Jones Newswires
October 29, 2020 01:24 AM ET (05:24 GMT)