By CentralBankNews.info
Japan’s central bank maintained its monetary policy stance, as widely expected, with board member Goushi Kataoka once again dissenting and calling for additional easing measures so yields on longer-dated bonds are pushed lower.
Kataoka first dissented at the BOJ’s policy board meeting in September and today said the BOJ should purchase government bonds (JGBs) so yields on 15-year bonds remain less than 0.2 percent.
In an update to its economic outlook, the Bank of Japan (BOJ) revised upwards its growth forecast but lowered the inflation outlook.
In the 2017 fiscal year, which began April 1, Japan’s economy is seen growing by 1.9 percent, up from July’s forecast of 1.8 percent, while inflation is seen averaging 0.8 percent, down from 1.1 percent.
For fiscal 2018, growth is seen slowing to 1.4 percent, the same as forecast in July, while inflation’s seen averaging 1.4 percent, down from 1.5 percent previously forecast.
For fiscal 2019 growth is seen slowing further to 0.7 percent, the same as forecast in July, while inflation is seen accelerating to an unchanged 2.3 percent. However, excluding the effects of a planned increase in taxes, inflation is seen averaging 1.8 percent, the same as seen in July.
The BOJ which in September 2016 shifted the focus of its policy of quantitative easing toward yield curve control, said it would continue to apply a negative interest rate of minus 0.1 percent on banks’ deposits that exceed reserve requirements and will continue purchasing government bonds around its current pace of around 80 trillion yen in order to keep 10-year government bond yields around 0 percent.
In addition, the BOJ will purchase exchange-traded funds (ETFs) and real estate investment trusts so their outstanding amount rise by an annual pace of about 6 trillion yen and about 90 billion yen, respectively.
The BOJ will also continue purchasing commercial paper and corporate bonds at a pace of about 2.2 trillion and 3.2 trillion yen, respectively.