At its most recent policy review meeting, BOJ policymakers discussed ways to make its accommodative monetary policy more sustainable even as some policymakers expressed cautious optimism about green shoots of recovery for Japan’s economy. The meeting held in March was focused on reviewing the central bank’s policy, with the bank looking to make its ultra-loose monetary policy and tools sustainable to support a long road to economic recovery following the damage caused by the coronavirus pandemic.

In the meeting, the BOJ also came to a decision about using its tools towards strengthening inflation and bringing it closer to its 2% target. The summary of the meeting which was released earlier today hints at the central bank planning to continue with its monetary policy unchanged over hopes that economic recovery around the world will spur external demand and lend a boost to its own trade-reliant economy.

One of the board members observed, “Although uncertainties remain over COVID-19 … downside risks to economic activity at home and abroad have been contained with no signs of increase in industries suffering from deteriorating business conditions.” Although, some policymakers did highlight concerns related to deflation or possible stagnation in prices as a key focus area even as its Western peers are worried about a hike in inflation over speedy recovery.

The monetary policy could be held steady for several years to come, and the decision has received approval from the government with an attending representative from the finance ministry also agreeing to the policymakers’ stance.