Jan 23, 2018 (Japan Times) - The Bank of Japan maintained its massive monetary stimulus program and kept its price and economic forecasts unchanged. In a small sign of progress, it said inflation expectations had stopped falling.
BOJ Gov. Haruhiko Kuroda said the bank wasn’t in a position to consider exiting its current policy after the Policy Board voted 8-1 to keep interest rates and asset purchases at current levels.
Inflation expectations remain more or less unchanged, versus a previous assessment that they were weakening, the BOJ said, though risks to prices remain “skewed to the downside.â€
The bank is projecting that the economy will grow 1.4 percent in the fiscal year starting in April, with inflation of 1.4 percent over the same period.
With the economy growing and inflation slowly but steadily rising, some investors have started to bet that the BOJ is nearing the point where it begins to normalize its ultraloose monetary policy. The yen gained strength after the BOJ cut its bond purchases earlier this month.
“The decision makes it clear that the BOJ doesn’t want any noise about early tightening now,†said Hiromichi Shirakawa, chief Japan economist at Credit Suisse Group AG and a former BOJ official. “The BOJ could have raised its growth forecast, given recent economic data, but it didn’t because it’s fearful of fueling speculation of policy normalization.â€
He added that “what they fear most is a strong yen.â€
