The Bank of Japan decided to maintain its interest rate at 0%-0.1% following its recent monetary policy meeting. This choice aligned with the predictions of economists surveyed by Reuters. Despite Tokyo's April inflation numbers falling short of expectations, with core inflation at 1.6% instead of the anticipated 2.2%, the bank remained steadfast in its decision.

Reaffirming its commitment to bond purchases as outlined in the March announcement, the Bank of Japan disclosed its monthly purchases of approximately ¥6 trillion ($83.5 billion) worth of bonds. Notably, the monetary policy statement did not include any remarks on the yen's trajectory, which has been on a consistent weakening trend since the BOJ's recent policy changes.

Following the decision to keep rates unchanged, the yen surpassed the 156 mark against the U.S. dollar, currently trading at 156.7. During a subsequent press briefing, BOJ Governor Kazuo Ueda clarified that while the bank's monetary policy does not directly impact currency rates, fluctuations in exchange rates could have significant effects on Japan's economy and prices.

Governor Ueda highlighted the importance of monitoring the impact of currency movements on the economy and prices, suggesting that such effects could prompt policy adjustments. He acknowledged the ongoing weak yen's limited influence on underlying inflation but cautioned against potential risks of cost-push inflation due to overall price overshooting.

Furthermore, Ueda emphasized the comprehensive assessment of underlying inflation, stating that a single data point would not suffice. The evaluation would consider various indicators and economic factors such as the output gap and inflation expectations driving price movements.

In a revision of its economic outlook for Japan's second quarter, the central bank adjusted its inflation forecast for fiscal 2024 to a range of 2.5% to 3%, up from the previous estimate of 2.2% to 2.5% in January. Looking ahead, inflation is expected to moderate to around 2% in fiscal 2025 and 2026. However, the Bank of Japan revised its GDP growth projections for fiscal 2024 to a range of 0.7% to 1%, lower than the initial forecast of 1%-1.2% growth in January.