Bank of Ja­pan keeps stim­u­lus in­tact, cuts in­fla­tion out­look

The Myanmar Times - Weekend - - International Business -

JA­PAN’S cen­tral bank opted Thurs­day to keep its lav­ish mon­e­tary stim­u­lus in­tact while down­grad­ing its out­look for in­fla­tion.

The Bank of Ja­pan’s pol­icy meet­ing ended Thurs­day with no change to its in­jec­tions of tril­lions of yen (hun­dreds of bil­lions of dol­lars) into the econ­omy each year through gov­ern­ment bond pur­chases.

The BOJ said in a state­ment that it fore­casts in­fla­tion at 1.1 per­cent in 2017, be­low its 2pc tar­get and also its ear­lier out­look for a 1.4pc rise in the con­sumer price in­dex.

“In­fla­tion ex­pec­ta­tions have re­mained in a weak­en­ing phase,” it said.

But the cen­tral bank raised its fore­cast for growth for the cur­rent fis­cal year to 1.8 per­cent from 1.6 per­cent, cit­ing in­creased ex­ports and im­prov­ing prof­its and busi­ness sen­ti­ment.

The BOJ’S as­sess­ment of the econ­omy re­ferred re­peat­edly to in­creased spend­ing and in­vest­ment linked to Tokyo’s 2020 Olympic games. But it said much of that boost to growth would dis­si­pate by 2019, as pre-olympics con­struc­tion wraps up and a long-de­layed sales tax hike is im­ple­mented.

BOJ Gov. Haruhiko Kuroda has sought to spur in­fla­tion, and en­cour­age busi­nesses and con­sumers to spend more sooner, through mas­sive as­set pur­chases and a neg­a­tive in­ter­est rate pol­icy.

But while cen­tral banks in Europe and the U.S. be­gin wind­ing back stim­u­lus mea­sures taken to counter the fall­out from the global fi­nan­cial cri­sis, Kuroda has said the BOJ will per­sist un­til it can achieve its in­fla­tion tar­get now not ex­pected un­til 2019.

Trade has helped un­der­pin the re­cov­ery, thanks to re­cov­er­ing de­mand in China and other parts of Asia.

Ja­pan’s ex­ports rose nearly 10pc in June from a year ear­lier, while im­ports jumped 15.5pc due largely to a rise in oil and gas im­ports, ac­cord­ing to cus­toms data also re­leased Thurs­day.

Ex­ports to China surged 20pc from a year ear­lier to 1.25 tril­lion yen (US$11 bil­lion/14.95 tril­lion), while ex­ports to the U.S., Ja­pan’s big­gest sin­gle over­seas mar­ket, climbed 7pc to $11 bil­lion.

The to­tal trade sur­plus of 439.9 bil­lion yen com­pared with a 686.5 bil­lion yen sur­plus in June 2016, down more than a third. – AP

A woman walks past the en­trance to the Bank of Ja­pan in Tokyo on May 2. Photo: AP

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