BOJ cuts in­fla­tion out­look, stands pat on stim­u­lus

The Myanmar Times - - International Business - Ky­odo

THE Bank of Ja­pan on Wed­nes­day cut its in­fla­tion out­look for the three years through fis­cal 2020 amid tepid price gains and height­ened global trade ten­sions.

The cen­tral bank’s board, mean­while, de­cided af­ter a two-day meet­ing to keep long-term and short-term in­ter­est rates at their cur­rent ul­tralow lev­els and to con­tinue its largescale as­set pur­chases.

Gover­nor Haruhiko Kuroda is sched­uled to meet the press later in the day to ex­plain the de­ci­sion.

The re­vi­sions put the cen­tral bank’s elu­sive 2 per­cent in­fla­tion tar­get, which Kuroda has pur­sued since en­ter­ing of­fice in 2013, even fur­ther from reach.

The BOJ cut its fore­cast for in­fla­tion in fis­cal 2018 to 0.9 per­cent com­pared with 1.1 per­cent ex­pected in July. Pro­jec­tions for fis­cal years 2019 and 2020 were both cut by 0.1 per­cent­age point to 1.4 per­cent and 1.5 per­cent, re­spec­tively.

The cen­tral bank also down­graded its out­look for growth in Ja­pan’s gross do­mes­tic prod­uct for the cur­rent fis­cal year end­ing in March by 0.1 per­cent­age point to 1.4 per­cent.

An es­ca­lat­ing tar­iff dis­pute be­tween the United States and China, the world’s two largest economies, has sparked con­cerns that the ef­fects could spill over to the rest of the world by re­duc­ing trad­ing vol­ume and un­der­min­ing busi­ness sen­ti­ment.

The US Fed­eral Re­serve’s wind­ing down of its own mon­e­tary eas­ing mea­sures also poses the risk of

trig­ger­ing an out­flow of cap­i­tal from emerg­ing mar­kets.

In Wed­nes­day’s de­ci­sion, the BOJ main­tained a pledge to keep in­ter­est rates low for “an ex­tended pe­riod of time” as house­holds and firms brace for an in­crease in the na­tion­wide con­sump­tion tax next Oc­to­ber.

It kept its bench­mark for the 10year govern­ment yield at around zero per­cent while al­low­ing for some flex­i­bil­ity, and re­tained a short-term in­ter­est rate of mi­nus 0.1 per­cent for some funds that fi­nan­cial in­sti­tu­tions keep parked at the cen­tral bank.

The BOJ also main­tained a sym­bolic pledge to in­crease its hold­ings of govern­ment bonds at an an­nual pace of 80 tril­lion yen, and made no changes to its pur­chases of as­sets such as ex­change-traded funds.

The board’s de­ci­sion was reached by a 7-2 ma­jor­ity, with Yu­taka Harada and Goushi Kataoka dis­sent­ing.

Newspapers in English

Newspapers from Myanmar

© PressReader. All rights reserved.