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March 19, 2025BANK OF JAPAN MONETARY POLICY On March 19, 2025, the Policy Board of the Bank of Japan decided to maintain their uncollateralized overnight call rate at around 0.5%.
The Bank of Japan projects the economy to keep growing at a pace above the potential growth rate. The growth is supported by government’s economic measures and with overseas economies continuing to grow.
Housing investment has been relatively weak and public investment has been flat. Year-over-year inflation has been in the range of 3.0%-3.5% recently with growth in prices for services. The effects of past rise in import prices are expected to wane, but underlying CPI inflation is expected to increase with a growing sense of labor shortage. Japan's output gap is expected to improve, and medium-long term inflation expectations are predicted to rise.
The risk to the monetary policy would come from Japan's economic activity and prices, as well as the overseas economies and developments in commodity prices. Japanese firms' behavior has also shifted towards raising wages and prices with exchange rate developments more likely to affect prices.
The Bank of Japan is focused on developments in the financial and foreign exchange markets and their impact on Japan's economic activity and prices.
The Bank will release their next monetary policy statement on May 1, 2025.
Source: Bank of Japan, Statement on Monetary Policy
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