Thursday, October 31, 2013
DJ: BOJ Maintains Key Policy Of Boosting Monetary Base By Y60tln-Y70tln Per Year
TOKYO--The Bank of Japan stood pat on its monetary policy Thursday, signaling confidence in hitting its ambitious inflation target, even as lackluster exports amid a slowdown in emerging markets has unnerved some central bank officials.
The market focus will now turn to the central bank's semiannual forecast on growth and prices to be released later in the day.
Covering the three-year period through March 2016, the report could offer clues to whether the BOJ will tinker with the aggressive asset-buying program launched in April, a prospect central bank officials have played down so far. Of the greatest interest is the forecast for the core consumer price index for the fiscal year ending in March 2016. The BOJ has pledged it will hit its 2% inflation target during the early part of that period.
At their one-day meeting Thursday, the BOJ's nine board members decided to keep the amount of fresh money the central bank pumps into the economy at Y60 trillion-Y70 trillion a year.
Since introducing the aggressive asset purchases seven months ago, BOJ officials have gone extra distance to play up the potential of the program through public speeches and news conferences, saying it can defeat deflation and realize the 2% inflation goal. One major aim is to stoke expectations prices will rise. BOJ officials see this as essential for producing actual 2% price increases, as structural woes such as a shrinking population mean rapid growth in domestic demand is unlikely.
But BOJ officials have increasingly expressed worries about weakness in foreign economies, which would bode ill for Japanese exports, people familiar with the officials' thinking say.
Under the central bank's main scenario, the economy is supposed to continue recovering next year as exports and business investment strengthen, offsetting anticipated sharp drops in household spending after the sales tax is raised in April. But Japan's growth outlook has become murkier recently as emerging market economies have slowed more sharply than the BOJ expected, while the U.S. budget debate has cast uncertainty over U.S. growth.
Some BOJ policymakers privately admit the central bank will have had to trim its growth outlook if not for the government's planned Y5 trillion spending package to cushion the blow from the tax hike, people familiar with the central bank's thinking said recently.