2018.07.3101:31:00UTC+00BoJ Maintains Stimulus; Brings Flexibility To Policy Framework

The Bank of Japan retained its massive monetary stimulus and announced its plan to bring flexibility in bond operations.

The bank said it intends to maintain the current extremely low levels of short and long-term interest rates for an extended period of time.

The bank will purchase government bonds so that the yield of 10-year JGBs will remain at around zero percent. "While doing so, the yields may move upward and downward to some extent mainly depending on developments in economic activity and prices," the bank said.

The BoJ is set to conduct purchases of Japanese government bonds in a flexible manner so that the outstanding amount will increase at an annual pace of about JPY 80 trillion.

The board retained the -0.1 percent interest rate on current accounts that financial institutions maintain at the bank.

The inflation outlook was downgraded while maintaining growth projections. The inflation forecast for fiscal 2018 was trimmed to 1.1 percent from 1.3 percent.

Likewise, projection for fiscal 2019 was lowered to 1.5 percent from 1.8 percent and that for 2020 to 1.6 percent from 1.8 percent.

At the same time, the bank maintained its growth forecast for both fiscal 2019 and fiscal 2020 at 0.8 percent.