The Bank of Japan refrained from expanding monetary stimulus on Thursday even after the economy slipped back into recession.
The Monetary Policy Board of the BoJ governed by Haruhiko Kuroda decided by an 8-1 majority vote to maintain its target of raising the monetary base at an annual pace of about JPY 80 trillion.
Policymakers turned cautious about inflation expectations. The bank said inflation expectations appear to be rising on the whole from a somewhat longer-term perspective, although some indicators have recently shown relatively weak developments.
At the end-October meeting, the bank downgraded its growth outlook and postponed the timing to achieve its 2 percent inflation target by six months.
Core consumer prices fell 0.1 percent for a second straight month in September.
A likely moderation in underlying inflation will eventually force policymakers to introduce more stimulus, Marcel Thieliant at Capital Economics, said. The end-January meeting is the most likely venue to step up the pace of easing.
The current stimulus was announced by the central bank in 2013, as it boosted its inflation fighting arsenal.
Takahide Kiuchi was the sole dissenter today. He proposed to raise the monetary base and the amount outstanding amount of Japanese government bonds be raised at an annual pace of about JPY 45 trillion instead of JPY 80 trillion.
The economy re-entered a technical recession in the third quarter as the economy contracted 0.8 percent after falling 0.7 percent in the second quarter.
Nonetheless, the BoJ said the economy has continued to recover moderately, although exports and production have been affected by the slowdown in emerging economies.
The finance ministry data today showed that exports declined for the first time in more than a year in October largely due to weak demand from China. Exports declined 2.1 percent from last year.
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