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December 19, 2024BANK OF JAPAN MONETARY POLICY On December 19, 2024, the Policy Board of the Bank of Japan decided to maintain their uncollateralized overnight call rate around 0.25%.
The Bank of Japan projects the economy to keep growing at a pace above the potential growth rate. The growth is supported by government’s economic measures and with overseas economies continuing to grow.
Year-over-year inflation (all items less fresh food) has been in the range of 2.0-2.5% recently as service prices rise, reflecting wage increases. It is expected that dissipation of the effects of government measures will make a positive contribution on pushing down inflation, while past declines in the crude oil and other resource prices will make a negative contribution. Japan's output gap is expected to improve, and medium-long term inflation expectations are predicted to rise.
The risk to the monetary policy would come from the overseas economies and developments in financial and currency markets. Japanese firms' behavior has also shifted towards raising wages and prices with exchange rate developments more likely to affect prices.
With the price stability target of 2%, it will conduct monetary policy as appropriate, in response to developments in economic activity and prices as well as financial conditions, from the perspective of sustainable and stable achievement of the target.
The Bank will release their next monetary policy statement on January 24, 2025.
Source: Bank of Japan, Statement on Monetary Policy
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