Japan's central bank decided on Thursday to maintain its current monetary easing measures and left unchanged its assessment of the world's third-largest economy.
At a two-day policy meeting, Bank of Japan's (BOJ) Governor Haruhiko Kuroda and his eight board colleagues voted unanimously to keep its ultra-easy policy introduced in April last year, according to a statement released by the BOJ after the meeting.
"The BOJ will continue with the quantitative and qualitative monetary easing, aiming to achieve the price stability target of two percent, as long as it is necessary for maintaining that target in a stable manner," the central bank said, adding that it will examine both upside and downside risks to economic activity and prices, and make adjustments as appropriate.
The BOJ said its monetary easing has been exerting its intended effects, showing its confidence that the country remains on track toward the price stability target.
In April 2013, the BOJ launched a massive monetary easing program to end deflation that has lasted for nearly 15 years and achieve the two percent inflation target in fiscal 2015. The measures center on doubling the monetary base and purchases of government bonds in two years as well as to purchase more risky financial assets, including exchange-traded funds and real estate investment trusts.
The central bank unchanged its assessment of the domestic economy, saying, "Japan's economy has continued to recover moderately as a trend, although the subsequent decline in demand following the front-loaded increase prior to the consumption tax hike has been observed." Last month, the BOJ cut its view on exports and production. "Exports have shown some weakness. Industrial production has continued to increase moderately as a trend, although it has recently shown some weakness," the bank repeated on Thursday.
On the price front, the BOJ said the year-on-year rate of change in the consumer price index is at around 1.25 percent. "Inflation expectations appear to be rising on the whole," it said.
With regard to the outlook, the BOJ said Japan's economy is expected to continue a moderate recovery as a trend, and the effects of the subsequent decline in demand following the April sales tax hike are expected to wane gradually. But it warned of risks, saying, "Risks to the outlook include developments in the emerging and commodity-exporting economies, the prospects for the European debt problem, and the pace of recovery in the US economy." The policy decision came after the government said last month that Japan's economy shrank at an annualized rate of 6.8 percent in the second quarter, posting the steepest contraction since the March 2011 "quake-tsunami disaster," as personal consumption and capital spending slumped following a sales tax hike in April. (end) mk.rk