The Bank of Japan did not make changes to the parameters of monetary policy, but revised its forecast for inflation and economic growth. At the same time, the Central Bank has signaled its readiness to raise interest rates again later this year. In March, the Bank of Japan ended an eight-year policy of negative interest rates, and made a historic transition from decades of massive monetary stimulus aimed at suppressing deflation and reviving economic growth.
During its April meeting, the Bank of Japan unanimously voted to keep the target short-term interest rate in the range of 0-0.1%. The head of the Bank of Japan, Ueda, said that at the moment the bank will maintain soft monetary conditions in order to stimulate a favorable cycle of wage and price growth. But he warned that the bank would raise the interest rate if inflation rises in line with the bank's projections.
The central bank said that inflation is likely to remain near the target level (2%) for the next three years. According to the updated forecasts, core consumer inflation will reach 2.8% in the year ending in March 2025 (previous forecast: 2.4%). The central bank also expects the core CPI to rise by 1.9% in the year ending March 2026 and the following year.
As for the economic outlook, forecasts suggest GDP growth of 0.8% in the current fiscal year (previous forecast: 1.2%) and 1% in the year ending in March 2026 and next year.
Some economists expect the Central Bank to raise interest rates again this summer, as the weakness of the yen - which hit a new 34-year low against the dollar today - is likely to increase inflationary pressures due to higher import prices for energy and food.