Japan Interest Rate

The Bank of Japan left its key short-term interest rate unchanged at -0.1% and that for 10-year bond yields around 0% during its January meeting, by an 8-1 vote, as widely expected. In a quarterly outlook report, meanwhile, the central bank adjusted its view of inflation risks for the first time since 2014, raising its inflation forecasts for FY 2022 that begin in April to 1.1% from earlier forecasts of 0.9% made in October, amid soaring costs of energy and raw material. Policymakers noted that risks to the price outlook were evenly balanced, with signs of a rise in inflation broadening. The board also revised higher the projected growth for FY 2022 to 3.8% from earlier projections of 2.9%, reflecting massive stimulus from the government; but lowered the GDP growth for the current FY to 2.8% from 3.4%, amid lingering supply constraints. The BoJ stressed that it will maintain its ultra-loose monetary policy even as its global counterparts seek to exit from crisis-mode policies.