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BoJ Minutes: Economic Growth Poised To Expand


Members of the Bank of Japan's monetary policy board stated that the country's economic growth will accelerate in the second half of fiscal year 2013, minutes from the board's October 31 meeting revealed on Tuesday.

But the members cautioned that the country's economic growth rate would slide considerably in fiscal year 2014.

"The growth rate for fiscal 2014 would slow substantially compared with the previous fiscal year, as there would be a decline in demand from the front-loaded increase in demand prior to the consumption tax hike, mainly in the first half. Nevertheless, the growth in exports was likely to accelerate, and business fixed investment would likely continue to increase firmly," the minutes said.

The board also noted that the economy is following the path to the 2 percent inflation target at a moderate pace.

The members also said that there remains a high degree of uncertainty over mid- to long-term inflation, the minutes showed.

"Most members expressed the view that the year-on-year rate of change in the CPI was likely to follow a rising trend, reflecting factors such as the improvement in the aggregate supply and demand balance as well as the rise in medium- to long-term inflation expectations, and it was likely to reach around 2 percent - the price stability target - toward the latter half of the projection period," the minutes said.

At the meeting, the BoJ kept interest rates unchanged at 0.10 percent, and it also said it will keep the target for the monetary base expansion at an annual pace of JPY 60-70 trillion.

In the latest economic outlook report released at the meeting, the BoJ projects a gross domestic product growth of 1.5 percent in fiscal 2014, which was better than the 1.3 percent predicted in July. GDP is seen growing 2.7 percent in fiscal 2013, slightly down from 2.8 percent projected earlier. The GDP outlook for fiscal 2015 remained unchanged from the July prediction of 1.5 percent.

"Exports continued to generally pick up. Real exports had turned upward in the January-March quarter of 2013 on a quarter-on-quarter basis for the first time in three quarters and had grown at an accelerated rate in the April-June quarter," the minutes said. "They then declined only marginally in the July-September quarter. Public investment continued to increase in a situation where effects of the government's economic measures, including emergency economic measures, had come to fully take hold."

Also on Tuesday, the BoJ said that an index measuring corporate service prices in Japan was up 0.8 percent on year in October, standing at 96.2.

That was shy of forecasts for an increase of 0.9 percent - but it was up from the 0.7 percent gain in each of the previous two months.

On a monthly basis, corporate service prices were flat for the second straight month.

Among the individual components of the survey, prices were up for finance, real estate and other services; prices were down for transportation and leasing.

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