BOJ Holds Monetary Policy Steady, Revises 2021 GDP Forecast Higher - Forex News by FX Leaders
BOJ Holds Monetary Policy Steady, Revises 2021 GDP Forecast Higher

BOJ Holds Monetary Policy Steady, Revises 2021 GDP Forecast Higher

Posted Thursday, January 21, 2021 by
Arslan Butt • 1 min read

At its latest meeting earlier today, the Bank of Japan decided to hold its monetary policy unchanged and turned more upbeat about Japan’s economic outlook for the next fiscal year. The BOJ maintains the view that it has rolled out adequate monetary stimulus to support the Japanese economy through the coronavirus crisis, even though it highlighted the risks that the latest round of restrictions posed to economic recovery.

Japan’s government imposed a second state of emergency across Tokyo and other parts of the country a few weeks ago and has since extended it in a bid to curb the spread of fresh infections. However, these restrictions are likely to hurt the already fragile consumer consumption, which could hold back economic recovery.

On a positive note, however, the BOJ has revised growth forecasts higher in its latest quarterly projections, supported by a rebound in exports and the rollout of the most recent fiscal stimulus measures by the government. While the central bank now expects Japan’s economy to contract by 5.6% instead of 5.5% previously, it has raised next year’s GDP estimates higher from 3.6% to 3.9%.

In its report, the BOJ observes, “Our projections could change depending on developments regarding the pandemic and how they affect domestic and overseas economies. Uncertainty is therefore extremely high.”

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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