Japan Stays Pat but Ups Assessment to ‘Recover’

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Japan’s central bank members voted unanimously to keep its key policy unchanged at its July meeting on Thursday, and gave a more optimistic assessment of the country’s economy, as expected by analysts.

The bank voted to maintain its pledge of increasing base money at an annual pace of 60 trillion to 70 trillion yen ($600-700 billion).

The Bank of Japan also made a slight change to its target of reaching 2 percent inflation by March 2016.

It said it saw 0.6 percent inflation for the fiscal year ending March 2014, down from a previous forecast of 0.7 percent, and 1.3 percent for fiscal year ending 2015, down from 1.4 percent previously.

The BOJ also said in its statement that Japan’s economy is starting to “recover moderately,” revising up its assessment for the seventh month in the row, and using wording not used by the bank since January 2011, according to Reuters. Last month it had improved its assessment of the economy to “picking up.”

The central bank also made slight downward revisions to its GDP growth forecasts. Growth for this fiscal year (2013) was forecast at 2.8 percent, down from 2.9 percent, next year’s was forecast at 1.3 percent, down from 1.4 percent, and 2015 at 1.5 percent, lower than the original 1.6 percent forecast.

The last time the bank took bold action at a policy meeting was back in April when it first announced plans to pump $1.4 trillion stimulus, in a bid to help the long-suffering economy out of 15 years of deflation.

Board member Takahide Kiuchi’s proposed that the central bank changed its inflation target to a medium to long term goal and commit to intensive easing in the next two years but his proposal was rejected 8 to 1, according to Reuters.

 

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