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"There is nothing in recent economic indicators that would lead the BOJ to change its economic outlook now"
- Mizuho Securities
The Bank of Japan decided to keep interest rates and QQE settings unchanged in line with expectations, but economists see room for further easing in coming months amid sluggish global growth and anemic inflation. BoJ's Governor Haruhiko Kuroda and his colleagues continue to gauge the economic effect of their unpopular negative-rate policy ahead of an election next month. BoJ Governor Haruhiko Kuroda's decision to keep policy settings unchanged comes just a week after data showed that Japan's economy grew 0.5% in the first quarter, beating the initial reading of 0.4%. While the central bank maintained its upbeat view of the world's third biggest economy, it revised downwards its outlook for consumer inflation to say prices were likely to decline slightly year-on-year or hover around flat for the time being.
The BoJ kept its massive asset buying programme, pledging to increase base money at an annual pace of 80 trillion yen. It also left unchanged a 0.1% negative interest rate applied to some of the excess reserves financial institutions park with the central bank. The decision to leave the base money target unchanged was made by a 8-1 vote, while maintaining the 0.1% negative rate was agreed in a 7-2 vote. A possible vote by the UK to exit the European Union was the biggest near-term concern for BOJ officials.