The central bank of Japan raises its inflation forecast and cuts fiscal year expectations, while maintaining ultra-low interest rates, saying that the economy was hit mainly by the COVID-19 pandemic.
The economy of Japan is a highly developed free-market economy. It is the third-largest in the world by nominal GDP and the fourth-largest by purchasing power parity (PPP). It is the world’s second-largest developed economy. Japan is a member of both the G7 and G20. The Bank of Japan raised its inflation forecast on Thursday, but maintained ultra-low interest rates and warned of risks to the economic outlook in a sign it will remain an outlier among a global wave of central banks tightening monetary policy. The decision came hours before that of the European Central Bank, which will consider a bigger-than-expected 50 basis point rate increase to tame soaring inflation. While rising fuel and commodity costs have pushed Japan’s inflation above its 2% target, the BOJ has repeatedly said it was in no rush to withdraw stimulus as slowing global growth cloud the outlook for the still-weak economy.