The Bank of Japan is rowing against the current and, unlike the Fed, ECB and other central banks, keeps interest rates negative (-0.10%) at its meeting held this Wednesday. This decision was expected by the market, despite the fact that the agency has worsened its outlook for the Japanese economy, which has predicted that it will advance by 1.9% in its 2022 financial year, less than previously estimated, according to its latest report from economic forecasts. The figure, which refers to the current Japanese fiscal year (which will end on March 31), is one tenth lower than that included in its report published in October, a more pessimistic view that responds to the impact of “the high prices of raw materials and the slowdown of foreign economies.
Although the Japanese issuing entity believes that the Japanese economy will recover in the medium term, its prospects are less rosy, mainly due to the expected global economic slowdown and the progressive loss of effectiveness of the economic measures adopted in response to it, according to the report. The BoJ has also lowered its forecasts for gross domestic product (GDP) for the year 2023, when it expects the national economy to grow by 1.7%, compared to the 1.9% previously estimated; and lowered its forecast for the year 2024 from 1.5% to 1.1%.
When it comes to inflation, the Japanese central bank also revised its most recent report. The entity expects the Japanese consumer price index (CPI) to close the 2022 financial year with a 3% riseone tenth above what was previously estimated and well above its goal of 2%, which the indicator has already exceeded for months in the country.
Biggest price increase in 41 years
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The consumer price index rose in Japan by 3.7% last November, its largest increase in 41 years, and is expected to close the calendar year at around 4%. Despite the acceleration of inflation and against the trend among other benchmark entities such as the US Federal Reserve (Fed) and the European Central Bank (ECB), the BoJ once again opted today to maintain its monetary policy, considering that This inflation is of an imported and transitory nature.
Regarding the price forecast for Japan’s fiscal year 2023, The Bank of Japan estimates that they will rise by 1.6%, and rose two tenths, to 1.8%, the forecast for 2024.