The BoJ Maintains Its Policy And Revises Upward Growth Forecast In 2020

Tokyo, Jan 21 (EFE) .- The Bank of Japan (BoJ) opted to maintain its monetary policy on Tuesday and revised its forecast of the country's economic growth for 2020 up to 0.9%, 'reflecting the effects of government economic measures'.

At the end of its monthly meeting on two-day monetary policy, the entity chose to maintain the short-term reference interest rate of -0.1% that has been applied since 2016 for deposits of financial institutions, in order to encourage spending and investments and achieve a progressive economic recovery.

He also decided to go ahead with his program of massive purchase of state assets so that the yield of those who have a long term of 10 years remains around 0%, as well as with his program of purchase of financial assets in private hands.


Both purchases will be made 'in a flexible way', based on 'the evolution of economic activity and prices', said the entity in the statement published at the end of the meeting.

The Japanese central bank thus opted for another month to maintain its measures, which seek to reach its elusive inflation target of 2%, whose achievement has been delayed several times in recent years and currently does not have a specific time frame.

Inflation in Japan stood at 0.9% at the end of 2018 and last November was 0.5% compared to the same month of 2018, and the entity is aware of the arduous task ahead.

Proof of this was the slight reduction of its forecasts in the price increase for the fiscal years of 2020 and 2021.

The BoJ lowered by one tenth its estimates of the growth of the CPI for these years in its quarterly report on economic forecasts, also published today Tuesday, and expects prices to rise 1% in 2020 and 1.4% in 2021.

The Japanese central bank chose, however, to revise its forecast on the country's economic growth in that biennium, "reflecting the effects of government economic measures."

Thus, it revised two tenths upwards the forecast of growth of the gross domestic product (GDP) of the country up to 0.9% in 2020 and one tenth upward up to 1% its estimate for 2021, with respect to its previous forecasts published last month of October.

The financial institution considers that the country's economic growth will follow a 'trend of expansion', given that it expects a 'limited' impact of the global economic slowdown on domestic demand, which it expects to improve after some relief from the situation abroad after the truce between the United States and China, as well as by government economic measures.

The BoJ noted, however, that it will remain vigilant against the risks that could jeopardize the economic activity of the country, including the growing 'geopolitical risks' or the rise in consumption tax (VAT) in Japan last October. EFE