The Policy Board of the Bank of Japan decided to leave monetary policy unchanged after the introduction of their Quantitative and Qualitative Easing with Yield Curve Control policy last year. The Bank of Japan will continue to apply a -0.1 per cent to Policy-Rate Balances for current accounts held by the Bank and they will purchase government bonds to keep the 10-year yield around zero per cent. Purchases for Japanese government bonds will be around 80 trillion yen per year and the Bank will continue purchasing exchange-traded funds at 6 trillion yen per year and real estate investment trusts at 90 billion yen per year. Commercial paper and corporate bond holdings by the Bank will be maintained.

A summary of the Bank of Japan's Outlook for Economic Activity has the economy continuing its moderate recovery. Exports have been increasing. Business fixed investment has been on a moderate increasing trend with improving profits and business sentiment. Private consumption remains solid with improving employment and income situations. Public investment has been turning towards an increase.

Inflation (all items less fresh food) has been increasing in a range of 0.0-0.5 per cent and inflation expectations have remained weak. The Bank of Japan noted that the mindset that wages and prices will not increase is deeply entrenched among firms and households. Firms have been absorbing a rise in labour costs by increasing labour-saving investment and limiting wage increases mainly to part-time employees. Firms' wage and price setting has remained cautious despite a tightening labour market and medium-term inflation expectations have lagged. The Bank of Japan year-on-year CPI growth forecast was lowered and is expected to be around 2 per cent in fiscal 2019.

Source: Bank of Japan's Statement on Monetary Policy