BOJ raises inflation forecasts, keeps ultra-low rates

The Bank of Japan raised its inflation forecasts on Friday but maintained ultra-low interest rates, remaining a dovish outlier among a global wave of central banks tightening monetary policy.

As widely expected, the BOJ kept unchanged its -0.1% target for short-term interest rates, and 0% for the 10-year government bond yield by a unanimous vote.

It also maintained its dovish policy guidance that pledges to ramp up stimulus as needed, and projecting that short- and long-term interest rates will move at “current or lower levels.”

In a quarterly review of its projections released on Friday, the central bank said it expects core consumer inflation to hit 2.9% in the current fiscal year ending in March 2023 and 1.6% the following year. It projects inflation to hit 1.6% in fiscal 2024.