The Bank of Japan kept its current monetary stimulus unchanged on Tuesday as it projects upbeat economic outlook even though the first sales tax hike since 1997 is set to oscillate consumer spending.
The Policy Board, governed by Haruhiko Kuroda, unanimously decided to continue to expand the monetary base at an annual pace of about JPY 60-JPY 70 trillion.
The annual pace of purchase of government bonds will remain at about JPY 50 trillion. The central bank launched its large stimulus April last year, when it vowed to end deflation and shore up consumer price inflation to 2 percent in two years time horizon.
The BoJ left its economic assessment unchanged from last month. Japan's economy has continued to recover moderately as a trend, albeit with some fluctuations due to the consumption tax hike, the bank said in a statement.
Further, the bank said business sentiment has continued to improve, although some cautiousness about the outlook has been observed.
"Japan's economy is expected to continue a moderate recovery as a trend, while it will be affected by the subsequent decline in demand following the front-loaded increase prior to the consumption tax hike," the bank added.
The central bank expects consumer prices, excluding the direct impact of the sales tax hike, to increase around 1.25 percent for some time.
The majority of policymakers observed that risks to the outlook include developments in the emerging and commodity-exporting economies, the prospects for the European debt problem, and the pace of recovery in the U.S. economy.
Sayuri Shirai said the pace of improvement in the employment and income situation in Japan should be added to the list of risks.
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June 19, 2026 16:46 ET Major central banks continued to dominate the economic news flow this week too, led by the Federal Reserve, as they announced their latest policy decisions. The Federal Reserve policy session was in focus as it was the first to be led by the new chief Kevin Warsh. In Europe, central banks of the U.K. and Switzerland announced their rate decisions. In Asia, the Bank of Japan drew attention for its policy moves, while data out of China threw some light on the state of the economy.