The BOJ's key policy principles remain unchanged:
- short-term interest rate target -0.1%
- 10-year bond yield at around 0% but flexible up to 1% (in October 2023 the bank made it even more flexible by stating that the 1% limit was just a “reference”)
Makes no changes to forward guidance on monetary policy
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No change in core-core inflation forecasts:
The median core-core CPI forecast for fiscal 2023 is +3.8 versus the +3.8% forecast in the October outlook report
- The median core-core CPI forecast for fiscal 2024 is +1.9%, up from +1.9% in October
- The median core-core CPI forecast for fiscal 2025 is +1.9%, up from +1.9% in October
But the core forecasts have been cut:
- The median core CPI forecast for fiscal 2023 is +2.8%, up from +2.8% in October
- The median core CPI forecast for fiscal 2024 is +2.4%, up from +2.8% in October
- The median core CPI forecast for fiscal 2025 is +1.8%, up from +1.7% in October
GDP forecasts:
- FY2023 1.8% versus 2.0% in October
- FY2024 1.2% versus 1.0% in October
- FY2025 1.0% versus 1.0% in October
BOJ quarterly report:
- The risks to economic activity are generally balanced
- It is important to closely monitor whether the virtuous cycle between wages and prices intensifies
- I will continue QQE with YCC for as long as necessary
- Do not hesitate to take further easing measures if necessary
- Boj will patiently continue monetary policy easing while reacting flexibly to developments
- Overall, the Japanese financial system has maintained its stability
Uncertainty remains, but the probability of achieving a sustainable 2% inflation rate continues to gradually increase
- Japan's economy is expected to continue to recover moderately
- One must pay attention to financial and foreign exchange market movements and their impact on Japan's economy and prices
- Inflation expectations are gradually rising
- Core consumer inflation is below 2.5%, partly due to moderate increases in services prices
- Consumption continues to rise moderately
- By the end of the forecast period in the quarterly report, inflation is expected to gradually accelerate towards the BoJ target
- Japan's output gap is improving and is expected to gradually widen in the future
- Medium and long-term inflation expectations are gradually rising
- Positive cycle of rising wages and increasing inflation
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More important and even more important is the press conference by Bank of Japan Governor Ueda, which will take place at 06:30 GMT.