Policy Statement
1. Interest Rate Decision: The Bank of Japan (BOJ) maintained its benchmark interest rate at 0.75% by a vote of 8 to 1, with board member Hajime Takada supporting a rate hike to 1.0%.
2. Economic Forecasts: The median forecasts for real GDP growth in fiscal years 2025-2027 are 0.9%, 1.0%, and 0.8%, respectively (compared to 0.7%, 0.7%, and 1.0% in October last year).
3. Inflation Forecasts: The median forecasts for core CPI in fiscal years 2025-2027 are 2.7%, 1.9%, and 2.0%, respectively (compared to 2.7%, 1.8%, and 2.0% in October last year).
4. Interest Rate Path: If economic and price trends align with its forecasts, and with improvements in the economy and prices, the policy interest rate will continue to rise.
5. Market Reaction: Nikkei 225 futures continued their upward trend, rising 0.4%. The USD/JPY pair rose more than 10 points in the short term, reaching a high of 158.65.
Press Conference
1. Economic Outlook: The Japanese economy is somewhat weak but is recovering moderately.
2. Inflation Outlook: The Committee will pay closer attention to core inflation when making policy decisions. On average, the Committee believes it is still some distance from its 2% inflation target.
3. Exchange Rate Issues: Exchange rates are determined by a variety of factors, not just interest rate differentials. A weaker yen could push up import costs and be passed on to domestic prices. The Committee will be mindful of the fact that exchange rates may have a greater impact on import costs.
4. Bond Market Issues: Long-term interest rates are rising quite rapidly. Operational measures may be taken to promote yield stabilization.
5. Interest Rate Outlook: Financial conditions remain accommodative following the December rate hike. If economic and price trends are consistent with forecasts, policy rates will continue to be raised as the economy and prices improve.
6. Other Matters: The Committee has decided not to sign the joint letter supporting Federal Reserve Chairman Powell, as this is a domestic matter. Maintaining the central bank's independence is crucial. 7. Market reaction: The USD/JPY exchange rate rose above 159, up 0.40% on the day.
