Key Takeaways 

  • The Bank of Japan (BoJ) unanimously decided to

    leave its policy settings unchanged. The policy rate

    was left at -0.1% and the target for 10-year bond yields

    was maintained at 0% with an upper bound of 1%.

  • The BoJ also extended by one year the deadline for

    loan disbursement under the Fund-Provisioning

    Measure to Stimulate Bank Lending.

  • The near-term forecasts for inflation were lowered a

    touch to reflect the recent decline. We continue to think

    inflation will fall further over the next few quarters as

    pressures from past import inflation abate.

  • However, the BoJ’s fiscal year 2025 inflation forecast

    was nudged up to 1.8%, and the wording around

    service price expectations was strengthened to reflect

    the potential for a virtuous cycle between wages and


  • The usual mix of caution and optimism was evident

    throughout the statement, forecasts and press

    conference. On the one hand, Governor Ueda believes

    that the likelihood of hitting the inflation target over the

    medium term continues to rise. On the other hand,

    even as the price goal looks to be in sight, the BoJ will

    maintain an easy stance.

  • We continue to expect that yield curve control (YCC)

    and negative interest rate policy (NIRP) will be

    removed later this year, after the BoJ has confirmed a

    strong Shunto wage round. Timing the precise meeting

    for any policy change is difficult, but, on balance, we

    expect a move by July.


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