Bank of Japan July 2021 monetary policy meeting
Keeps monetary policy steady
- maintains 10-year JGB yield target around 0%
- maintains short-term interest rate target at -0.1%
Growth forecasts downgraded for this fiscal year:
- real GDP median forecast for fiscal 2021/22 at +3.8% vs +4.0% in April
- real GDP median forecast for fiscal 2022/23 at +2.7% vs +2.4% in April
- real GDP median forecast for fiscal 2023/24 at +1.3% vs +1.3% in April
Core CPI forecasts ahead:
- Fiscal 2021 0.6% y/y vs. 0.1% in April
- FY 2022 0.9% vs. 0.8%
- FY 2023 1.0% vs. 1.0%
The BOJ see big gains for the inflation in the current fiscal year but more muted gains after that.
From the Bank's quarterly report, Headlines via Reuters:
- Japan's consumer inflation likely to hover around 0% for the time being
- consumer inflation likely to gradually accelerate
- economic outlook highly uncertain, swayed by pandemic developments
- the economy remains in severe state but picking up as a trend
- risks to Japan's economic outlook skewed to downside for time being, balanced longer term
- risks to price outlook skewed to downside
- medium-, long-term inflation expectations moving sideways
- long-term inflation expectations likely to heighten ahead
- financial intermediation may stagnate if bank profits come under prolonged pressure from covid-19
- corporate profit continue to improve although recent rises in commodity costs will weigh
In the immediate aftermath of the statement and report USD/JPY is barely changed:
The Bank of Japan also released an outline of its new program aimed at boosting funding for activities combating climate change
- to offer zero-interest funds for a period of a year
- can be rolled over any number of times
- to financial institutions increasing loans or investment for fighting climate change
