BoJ Minutes: Economy Starting To Level Off

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The members of the Bank of Japan's monetary policy board believe that the economy in Japan has stopped worsening - although some uncertainty remains, minutes from the board's policy meeting on March 6 and 7 revealed on Tuesday.

The Japanese economy is expected to see a moderate recovery path, the minutes added.

"Exports appear to stop decreasing," the minutes said. "Public investment has continued to increase, and housing investment has generally been picking up. Private consumption has remained resilient. Reflecting these developments in demand both at home and abroad, industrial production has stopped decreasing. Meanwhile, financial conditions in Japan are accommodative."

Overseas economies remain soft, although they too are showing signs of picking up, the bank said.

However, the board believes that there are still a number of downside risk factors for Japan from abroad, the minutes said.

"There remains a high degree of uncertainty concerning Japan's economy, including the prospects for the European debt problem, the momentum toward recovery for the U.S. economy, the possibility of emerging and commodity-exporting economies making a smooth transition to the sustainable growth path, and the effects of the recent bilateral relationship between Japan and China," the minutes said.

At the meeting, the policy board unanimously voted to retain the benchmark uncollateralized overnight call rate at 0-0.1 percent. The board also decided to hold the size of the asset purchase program at JPY 76 trillion.

The BoJ said it will pursue monetary easing, through a virtually zero interest rate policy and purchases of financial assets, as long as the bank judges it appropriate to continue with each policy measure respectively.

It also vowed to achieve the 2 percent inflation target at the earliest possible time, accelerating its fight against the deflationary pressures that have gripped the country for years.

"The Bank has set the price stability target at 2 percent in terms of the year-on-year rate of change in the CPI," the minutes said. "Under the price stability target specified above, the Bank will pursue monetary easing and aim to achieve this target at the earliest possible time."

The meeting also marked the final gathering chaired by Masaaki Shirakawa, who has since been replaced as head of the BoJ by Haruhiko Kuroda - a strong advocate of aggressive monetary easing.

"The Bank will pursue aggressive monetary easing, aiming to achieve the above-mentioned price stability target, through a virtually zero interest rate policy and purchases of financial assets, as long as the Bank judges it appropriate to continue with each policy measure respectively," the bank said. "In addition, the Bank will provide support for financial institutions' efforts to strengthen the foundations for economic growth and to increase their lending."

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