Bank of Japan keeps monetary policy unchanged, sees slightly higher inflation in fiscal 2024

The Bank of Japan kept its policy rate unchanged Friday after its monetary policy meeting, holding its benchmark policy rate at 0%-0.1%.

This is in line with expectations from economists polled by Reuters.

While the move was expected, this comes after Tokyo's April inflation came in lower than expected, with the core inflation rate at 1.6% compared to expectations of 2.2% from Reuters.

The BOJ also said it will continue to conduct bond purchases in line with the March decision. The bank previously said in March it bought about six trillion yen ($83.5 billion) worth of bonds per month in the past.

No comment was made by the BOJ on the yen in the monetary policy statement, which has steadily weakened since the BOJ ended its negative interest rate policy last month and abolished its yield curve control policy.

The currency broke through the 156 mark against the U.S. dollar Friday after the decision, most recently trading at 156.7.

During a press conference later Friday, BOJ Governor Kazuo Ueda said that while the bank's monetary policy does not directly target currency rates, exchange rate volatility could have a "significant impact" on Japan's economy and prices, according to a Reuters translation.

Ueda added that "if yen moves have an effect on the economy and prices that is hard to ignore, it could be a reason to adjust policy," according to remarks translated by Reuters.

He pointed out that the weak yen has not had a big impact on underlying inflation for now, but noted that "prices are overshooting as a whole," Reuters reported. Ueda also that there is a risk that Japan could see another round of cost-push inflation, according to the translation.

Cost-push inflation refers to when prices rise due to increases in production