By CentralBankNews.info
     The Bank of Japan (BOJ) maintained its monetary policy stance, with two new deputy governors voting with Governor Haruhiko Kuroda, as the bank’s growth forecast for the current fiscal year was raised while the inflation forecast was lowered.
      The BOJ, which in September 2016 changed the focus of its monetary policy to yield curve control from quantitative easing to boost inflation to 2 percent, added risks to economic activity in fiscal 2018 were balanced while the risk were skewed to the downside for fiscal 2019, mainly due to international developments and the dampening impact of a hike in taxes in October 2019.
       On the price front, the BOJ said the risks were skewed to the downside from lagging inflation expectations, the lack of responsiveness to the output from some services prices and rent, and the development of foreign exchange rates and international commodity prices.
       In an update to its economic forecast, the majority of the BOJ’s board expects Japan’s Gross Domestic Product to grow by 1.6 percent in fiscal 2018, which began on April 1, up from 1.4 percent that was forecast in January. This compares with an estimated 1.9 percent growth in fiscal 2017.
       Inflation, which declined to 1.1 percent in March from 1.5 percent in February, is seen averaging 1.3 percent in fiscal 2018, down from the previous forecast of 1.4 percent.
       For fiscal 2019 economic growth is seen at 0.8 percent, up from a previous forecast of 0.7 percent while inflation, including the impact of a hike in sales taxes, is seen unchanged at 2.3 percent.
        For fiscal 2020, growth is seen steady at 0.8 percent while inflation is seen at 2.3 percent and 1.8 percent when the impact of a rise in consumption taxes to 10 percent from 8 percent is excluded.
       The BOJ also confirmed that it will continue with “Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control” as long as necessary in order to reach its 2.0 percent inflation.
        This policy includes a negative interest rate of minus 0.1 percent on banks’ deposits that exceed reserve requirements along with the purchase of government bonds of around 80 trillion yen in order to keep 10-year government bond yields around 0 percent.
        The two-day meeting by the BOJ’s policy board was the first since Governor Kuroda was approved for a second term, and included two new board members: Masazumi Wakatabe and Masayoshi Amamiya.

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