Bank of Japan pushes on with ultra loose monetary policy

TOKYO: Japan’s central bank pressed ahead with its ultra-loose monetary policy yesterday on the back of an improving economy, as its overseas counterparts start turning off the stimulus taps.

The Bank of Japan (BoJ) held steady after a meeting with its chief giving no clues on when policymakers may pull back on the growth programme, with the world’s third biggest economy enjoying its longest expansion in more than a decade.

The bank’s widely expected decision came a day after the US central bank said it would start to wind down its crisis-era stimulus and hinted at another rate hike by the end of the year.

Markets are also keeping a close eye on the European Central Bank for clues as to when it will start to take its foot off the stimulus pedal and raise borrowing costs.

But with consumer prices still a long way off the BoJ’s 2% inflation target, governor Haruhiko Kuroda said the bank would leave its huge ¥80 trillion (RM2.9 trillion) annual asset-buying plan and negative interest rate policy in place.

“Our country’s inflation rate is still far from our target so it’s only natural that our monetary easing policies are different,” from the US and Europe, Kuroda told reporters at a post-meeting press briefing. “I see no problem with that,” he added. Economists have grown increasingly sceptical about the BoJ’s ability to slay years of on-off deflation, and warned about the possible negative impact of exiting the stimulus scheme.

But Kuroda said the impact would be “nothing extraordinary” once the BoJ eventually starts to wind down its stimulus.

“Inflation remains a long way below its projections, so further reductions in the (BoJ’s) forecasts next month are all but guaranteed,” Marcel Thieliant at research house Capital Economics said in a commentary.

“Policy tightening remains a long way off,” he added. – AFP