The Bank of Japan (BoJ) is a central bank that always seems to have a surprise up its sleeve when it comes to monetary policy decisions.
Anyone looking for a shock decision today would have been disappointed, however, as it chose to keep monetary policy steady at the conclusion of its June meeting.
Voting 7-2 in favour of the measure, the bank decided to retain its quantitative and qualitative monetary easing (QQE) with yield curve control program, keeping interest rates unchanged at -0.1% while pledging to purchase Japanese government bonds (JGB) so that 10-year JGB yields will remain at around zero percent.
It said that it would conduct JGB purchases at an annual pace of around 80 trillion yen with the aim “to achieve the target level of the long-term interest rate specified by the guideline”, in this case 0%.
Some had speculated that the BoJ may have used this meeting to remove the reference to the amount of JGBs it would purchase.
That did not happen today.
The BoJ also left its annual purchases of exchange traded funds, Japan real estate investment trusts and corporate paper and bonds unchanged at about 6 trillion yen, 90 billion yen and 5.4 trillion respectively.
In its accompanying monetary policy statement, the BoJ raised its assessment on the household consumption, while keeping its assessment of the broader Japanese economy unchanged.
On consumption, is has “increased its resilience against the background of steady improvement in the employment and income situation”. It also said that “labour market conditions have continued to tighten steadily”.
On the broader Japanese economy, it said that it “has been turning towards a moderate expansion”, repeating the language previously used in April.
On the inflation front, it pledged to continue with its QQE with yield curve control program for “as long as it is necessary” to achieve its inflation target of 2% “in a stable manner”.
The bank also made a small tweak to its assessment on the global economy, saying that “overseas economies continued to grow at a moderate pace on the whole”. Previously it said that “emerging economies remained sluggish in part.”
Financial markets have barely budged following the release of the decision, will all attention now turning to BoJ governor Kuroda’s press conference later this afternoon, including any discussion on the potential unwinding of the bank’s monetary easing program.
The full monetary policy statement from the BoJ can be accessed here.