Plus   Neg

BoJ Holds Monetary Policy Steady


The Bank of Japan on Thursday decided to keep its massive stimulus program unchanged while also retaining its outlook of a moderate economic recovery.

At the end of a two-day meeting of the nine-member Policy Board, led by Governor Haruhiko Kuroda, the central bank said it will keep the target for the monetary base expansion at an annual pace of JPY 60-70 trillion.

In April, Kuroda announced the bank's plan to double the monetary base in two years with an aim to reverse 15 years of deflation in the country. Indicators released thus far have suggested that his efforts are gradually taking effect.

"Japan's economy has been recovering moderately," the central bank said while maintaining its assessment after an upgrade in September. It also noted that the year-on-year change in the core consumer price index is now in the range of 0.5-1 percent.

Inflation expectations in Japan appear to be on an upward trend and the annual inflation rate is seen rising gradually, the bank said.

Exports and industrial production are also improving, according to the BoJ statement. The bank expects the economy to continue a moderate recovery going forward.

In the latest economic outlook report released last month, the BoJ upgraded its gross domestic product forecast for fiscal 2014 to 1.5 percent from the 1.3 percent predicted in July. The GDP is seen growing 2.7 percent in fiscal 2013, slightly down from the 2.8 percent projected earlier.

According to the BoJ, the substantial slowdown in growth in fiscal 2014 compared with fiscal 2013 mainly reflected a decline in demand from the front-loaded increase in demand prior to the consumption tax hike.

The bank expects the core measure of inflation to reach the bank's price stability target of 2 percent toward the latter half of fiscal 2015.

In October, Prime Minister Shinzo Abe's administration decided to go ahead with the planned consumption tax hike from April 2014 to help reduce the nation's huge debt pile. This is widely seen as a very important step towards the much-needed fiscal and structural reforms.

Abe also announced an economic stimulus package worth JPY 5 trillion to cushion the potential negative impact that the tax hike could have on the economy.

For comments and feedback contact: editorial@rttnews.com

Economic News

What parts of the world are seeing the best (and worst) economic performances lately? Click here to check out our Econ Scorecard and find out! See up-to-the-moment rankings for the best and worst performers in GDP, unemployment rate, inflation and much more.

Follow RTT