The Bank of Japan kept interest rates unchanged at <0.10% as expected while mostly maintaining growth expectations and inflation numbers next year.
- The Bank of Japan's benchmark interest rate remains stable at less than 0.10%.
- Annual CPI is expected to remain within the range of 2.5-3.0% in 2024 and around 2% in 2025-2026.
Link to the Bank of Japan's Monetary Policy Statement for April
In its quarterly forecast report, the Bank of Japan noted that the Japanese economy “is likely to continue to grow at a pace above its potential growth rate.”
Regarding inflation, they explained that cost increases from previous gains in import prices are expected to diminish, but core inflation may continue to rise due to an improving output gap.
Link to the Bank of Japan's quarterly outlook report
Market reactions
Japanese Yen against major currencies: 5 minutes
Overlay of the Japanese Yen against the major currencies Chart by TradingView
The Japanese currency was gradually rising against its counterparts before the Bank of Japan's decision, as traders appeared wary of possible intervention in the currency market.
However, the official statement did not include any remarks on the yen's rapid movements and did not include major changes in growth and inflation forecasts for the current and next year. With this, the yen fell across the board minutes after the announcement and continued to fall while waiting for Ueda's press conference.
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