Senior Economist at UOB Group Alvin Liew reviews the latest interest rate decision by the BoJ.

Key Takeaways

“The Bank of Japan (BOJ), as widely expected, decided to keep its policy measures unchanged at its Monetary Policy Meeting (MPM) and downgraded the view on the economy due to impact from COVID-19 on 18 Mar 2022.”

“In a stark divergence with its G7 peers who are on the cusp or already normalizing monetary policy, the BOJ kept its preference for easing as it retained the statement that “it expects short- and long-term policy interest rates to remain at their present or lower levels.” It also highlighted the extremely high uncertainties over how the Russia-Ukraine war will affect Japan's economic activity and prices.”

“With the inflation largely stemming from an uncertain supply shock while domestic demand remains weak, we are certain that the BOJ will keep its current easy monetary policy intact for 2022 and will maintain its massive stimulus, possibly at least until FY2023.”