Japan holds stimulus as global peers rebound
tokyo — The gap between the Bank of Japan and its global peers widened on Friday.
The BoJ maintained its aggressive asset-purchase and yieldcurve targets less than 24 hours after the European Central Bank mapped out an exit from its crisisera policies, and just days after the US Federal Reserve again raised interest rates.
Underscoring the divide, the BoJ downgraded its assessment of inflation while Governor Haruhiko Kuroda repeated his pledge to continue with stimulus until Japan reaches its two per cent inflation target.
“It’s appropriate for Japan to continue current powerful monetary easing persistently,” Kuroda told reporters. He cited an entrenched “deflationary mindset” that’s beset Japan for decades but “doesn’t exist in the US or Europe.”
Economists, who were unanimous in forecasts for policy to remain unchanged, said there is little chance that the BoJ will consider an exit strategy in the near term. While Kuroda insisted that the longer-term price trend is positive, the BoJ said inflation is currently sitting in a range of 0.5 per cent to one per cent, weaker than around one per cent earlier this year.
Kyohei Morita, chief Japan economist at Credit Agricole, said it’s “crystal-clear” that the BoJ is headed in a different direction than its peers.
“What’s interesting is that there is not much call for the BoJ to add more stimulus,” Morita pointed out.