BOJ announce no change to policy, as expected

<p>The BOJ's main policy planks remain unchanged:</p><ul><li>short-term interest rate target -0.1%</li><li>10-year bond yield around 0%, but flexible up to 1% (in October 2023 the Bank made it even more flexible by saying the 1% bound is only a ‘reference’)</li></ul><p>
Makes no changes to forward guidance on monetary policy</p><p>

—</p><p>No change to core-core inflation forecasts:</p><ul><li>
Core-core CPI fiscal 2023 median forecast at +3.8 vs +3.8% forecast in the October Outlook Report</li><li>Core-core CPI fiscal
2024 median forecast at +1.9% vs +1.9% in October</li><li>Core-core CPI fiscal
2025 median forecast at +1.9% vs +1.9% in October</li></ul><p>
But core forecasts trimmed:</p><ul><li>Core CPI fiscal 2023 median forecast at +2.8% vs +2.8% in October
</li><li>Core CPI fiscal 2024
median forecast at +2.4% vs +2.8% in October
</li><li>Core CPI fiscal 2025
median forecast at +1.8% vs +1.7% in October</li></ul><p>GDP forecasts:</p><ul><li>FY 2023 1.8% vs. 2.0% in October </li><li>FY 2024 1.2% vs. 1.0% in October </li><li>FY 2025 1.0% vs. 1.0% in October </li></ul><p>BOJ quarterly
</p><ul><li>Risks to economic
activity generally balanced</li><li>Need to closely
monitor whether virtuous cycle between wages and prices will
intensify</li><li>Will continue with
QQE with YCC as long as needed</li><li>Won't hesitate to
take additional easing steps if needed</li><li>Boj will patiently
continue with monetary easing while nimbly responding to developments</li><li>Japan's financial
system has maintained stability on the whole</li></ul><ul><li>
Uncertainty remains but likelihood of achieving sustained 2%
inflation continues to gradually heighten</li><li>Japan's economy
likely to continue recovering moderately</li><li>Must be vigilant to
financial, fx market moves and their impact on japan's economy,
expectations gradually heightening</li><li>Core consumer
inflation moving below 2.5%, partly reflecting moderate rise in
service prices</li><li>Consumption
continues to rise moderately</li><li>Inflation likely to
gradually accelerate toward boj's target through end of projected
period in quarterly report</li><li>Japan's output gap
improving, likely to gradually expand ahead</li><li>Medium-, long-term
inflation expectations heightening gradually</li><li>Positive cycle of
rising wages, inflation to strengthen</li></ul><p>—</p><p> Still to come, and of even more focus, is Bank of Japan Governor Ueda's press conference due at 0630 GMT. </p>

This article was written by Eamonn Sheridan at

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