BoJ keeps the steady hand, revises down inflation forecasts – UOB

Senior Economist at UOB Group Alvin Liew comments on the recent BoJ event.

Key Quotes

“The Bank of Japan (BOJ), as widely expected, decided to keep its policy measures unchanged at its Monetary Policy Meeting today (27 Apr). And in its April 2021 outlook for economic activity and prices (The Bank’s View), the BOJ unsurprisingly kept its cautious recovery outlook and upgraded its growth forecasts although the easing growth trend remains intact until FY2023. The most notable change was the inflation forecast downgrade for FY2021 and the persistent view of well below 2% inflation forecasts in FY2022/2023.”

“While today’s policy inaction was in line with market expectations, the weaker inflation outlook reinforces our view that the BOJ will not be tightening anytime soon, and will maintain its massive stimulus in the next few years, possibly at least until FY2023. We also keep our view for the BOJ to do more and enhance its monetary policy easing further and we are also cognizant that market expectations are now tilted to the BOJ having reached the end of the line on normalization and will remain in a holding pattern on policy until at least April 2023 when Governor Kuroda is scheduled to leave the BOJ.”