Bank of Japan keeps interest rates unchanged

The Bank of Japan raised its inflation forecast but kept interest rates unchanged at -0.1% and warned of risks to the economy, cementing its position as an outsider in the global central bank’s tightening wave.

The decision came hours before the European Central Bank, which will consider a larger-than-expected 50 basis point increase in the interest rate to tame hyperinflation.

In the new quarterly forecast, the board raised core consumer inflation to 2.3% from 1.9% for the current fiscal year ending March 2023. It also raised inflation expectations for the following year to 1.4% from 1.1%.

But the Bank of Japan lowered its growth forecast for the current fiscal year to 2.4% from 2.9% and warned of the potential hit from persistent supply constraints, rising commodity prices and the pandemic.