Japan’s central bank remains on course – inflation outlook raised

TOKYO (dpa-AFX) – Japan’s central bank is sticking to its extremely relaxed position despite rising inflation and the rapid weakening of the yen monetary policy Celebration. The Bank of Japan (BoJ) decided on Friday after a two-day meeting. In addition, the central bank raised the inflation forecast for the fiscal year running until the end of March 2023 from 2.3 to 2.9 percent. At the same time, the economy will only grow by 2.0 percent instead of the previously expected 2.4 percent, it said. The Japanese central bank is thus continuing to resist the trend towards monetary tightening, despite rising inflation.

Short-term interest rates are to remain at minus 0.1 percent and long-term rates at around zero. Market circles had expected the BoJ to stick to the yen. The government wants to cushion the consequences of inflation for the population with an economic stimulus package worth billions. It will involve government spending of 29.1 trillion yen (198 billion euros), Japanese media reported on Friday.

Although inflation in Japan is significantly lower than in many other countries, it is relatively high by Japanese standards. It hits the country at a time when the world’s third largest economy, ahead of Germany, is only slowly recovering. The situation is exacerbated by the rapid weakening of the yen, since this increases the import costs for the industrialized country, which has few raw materials. According to experts, the yen is also being weighed down primarily by the BoJ’s monetary policy./ln/DP/mis

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