BOJ maintains massive stimulus, remains upbeat on economy

Central bank says growth will strengthen enough to accelerate inflation to its 2% target without more monetary easing

Tokyo, June 19: The Bank of Japan maintained its massive stimulus programme and its upbeat assessment of the economy on Friday, signalling its conviction that growth will strengthen enough to accelerate inflation to its 2% target with out more monetary easing.

Markets are focusing on what governor Haruhiko Kuroda will say in his postmeeting briefing on the merit and downside of a weak yen, which is becoming a politically sensitive issue.

With business sentiment improving and capital expenditure picking up, the BOJ maintained its rosy assessment that the economy continues to recover.

As widely expected, the central bank also kept intact its pledge to increase base money at an annual pace of 80 trillion yen ($650 billion) through aggressive asset purchases. The decision was made by an 8-1 vote.

"Exports are picking up and capital expenditure is rising moderately as a trend as corporate revenues improve," the BOJ said in a statement.

It also revised up its assessment on housing investment to say it "appeared to be picking up." Last month, it said housing investment was bottoming out with some signs of a pick-up.

Japan's economy has emerged from last year's recession as consumers recovered from the pain from a sales tax hike and capital expenditure grew. But the nine-member board is hardly complacent, with soft exports re-emerging as a source of headache.

Growth is seen slowing to 1.3% in April-June from an annualised 3.9% expansion in the first quarter, according to a Reuters poll.

Markets expect the BOJ to ease again in October, though some investors have pushed back their forecasts for more action after the stronger-thanexpected first-quarter growth figure.