Bank of Japan Stands Pat on Monetary Policy
The Bank of Japan maintained its massive monetary stimulus and its upbeat view on the economy on Thursday, unfazed by recent signs the pain from an April sales tax rise may last longer than expected and make its inflation target harder to achieve.
But the central bank cut its assessment on housing investment and warned that factory output remained weak.
“Japan’s economy continues to recover moderately as a trend,” although the effects of the sales tax hike in April are lingering, the central bank said in a statement issued after its policy meeting, sticking with its assessment from last month.
Private consumption is firm as the effect of the sales tax increase to 8 percent from 5 percent is easing.
But the central bank maintained its projection that the economy will continue to recover moderately.
“The BOJ is saying that right now parts of the economy are weaker than expected, but it still expects growth to accelerate in the future,” said Hiroshi Miyazaki, senior economist at Mitsubishi UFJ Morgan Stanley Securities.
“It is possible the BOJ will downgrade this fiscal year’s GDP forecasts, but as long as it expects healthy growth for next fiscal year, I see no change to its policy stance.”
Source: NYT
