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July 31, 2018BANK OF JAPAN MONETARY POLICY The Policy Board of the Bank of Japan announced today that it will persist with powerful monetary easing, maintaining a short term policy interest rate of negative 0.1 per cent on balances held by financial institutions with the Bank. The Bank will continue its purchases of Japanese Government Bonds in order to keep 10-year yields at around zero per cent. These bond purchases will be flexible, with amounts outstanding rising by about 80 trillion yen per year. The Bank will continue purchasing exchange-traded funds at 6 trillion yen per year and real estate investment trusts at 90 billion yen per year. Commercial paper and corporate bond holdings by the Bank will be maintained.
The Bank strengthened its commitment to the price stability target by announcing forward guidance for policy rates. Current extremely low levels of short and long term interest rates will be maintained for an extended period of time. This considers ongoing uncertainties, including the scheduled increase of the consumption tax in October 2019.
The Bank of Japan notes that the economy is expanding moderately from higher income and spending. Although labour market conditions are tight, price growth remains weak and the Bank now expects it will take longer to achieve the price stability target of 2 per cent.
Source: Bank of Japan's Statement on Monetary Policy
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