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Forex News

BOJ to keep policy steady, raise growth outlook as risks subside

Ahead of the Bank of Japan (BOJ) monetary policy decision due on January 21st, Reuters is out with the preview of the BOJ event, suggesting that the Japanese central bank is likely to keep its monetary policy settings unchanged next week.

However, the BOJ could raise its economic growth forecast, in the face of the US-China phase one deal and receding US-Middle East tensions.

Key Points (via Reuters):

“At the two-day rate review that ends on Tuesday, the BOJ is set to keep its short-term interest rate target at -0.1% and a pledge to guide 10-year government bond yields around 0%.

It is also seen maintaining a guidance that commits to keeping rates at current low levels, or even to cut them, until risks keeping it from achieving its 2% inflation goal subside.

Reuters quotes sources, saying that “in a quarterly review of its forecasts, the BOJ is seen slightly revising up its growth projection for the fiscal year starting in April, helped by a boost from the government’s stimulus package.”

Pessimists in the BOJ fret that weak global auto demand and the drag on consumption from October’s sales tax hike to 10% from 8% may mean only a modest rebound in January-March growth.”

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