BOJ keeps stance, expansion goes on despite slowdown

Sourced from:

Japan’s central bank abandoned its monetary policy stance unchanged, as expected, but acknowledged the nation ’s exports and industrial production have been affected by the worldwide economic slowdown.
     However, the Bank of Japan (BOJ) still expects the economy to continue its “moderate growth ” despite the downturn in overseas economies as national demand trends upward, helped by government spending.
     “Even though exports are estimated to show any weakness for now, they’re expected to be about a moderate increasing tendency on the back of overseas economies growing moderately on the whole,” BOJ stated.
     In now ’s announcement, the BOJ’s policy board confirmed its monetary policy of controlling the yield curve that’s been in place since September 2016 – Quantitative and Qualitative Easing with Yield Curve Control (QQE) – and this coverage could continue until inflation reaches its 2 percent target.
     In its outlook for economic activity and prices from January, the BOJ reduced its inflation forecast for the fourth time, together using inflation excluding new food noticed rising only 0.8 percent in fiscal 2018, which ends this season, down from October’s forecast of 0.9 percent.
    In January Japan’s heart inflation rate edged up to 0.8 percent from 0.7 percent in December.
    Consumer costs in fiscal 2019, excluding the impact of the consumption tax hike, are observed rising 0.9 percent, down from 1.4 percent previously forecast, because of lower oil prices, and also for financial 2020 inflation is seen at 1.4 percent, down by 1.5 percent.
     Japan’s market is predicted to continue to expand about its potential rate, together with growth in fiscal 2018 hit by natural disasters last summer.
     The estimate of gross domestic product increase in financial 2018 was lowered to 0.9 percent from October’s prediction of 1.4 percent.
     GDP grew 0.5 percent in the fourth calendar quarter of 2018 from the next quarter for annual growth of 0.3 percent, up from 0.1 percent in the next quarter.
     For this coming financial year, the forecast for growth was revised up to 0.9% from a past 0.8 percentage, and for fiscal 2020 expansion is observed at 1.0 percent, up from 0.8 percent.
     After falling from March 2018 to December, the yen rose strongly in late December but has since given up a number of the gains this season. Now the yen was trading in 111.8 to the U.S. dollardown 1.3 per cent this year.
      As part of its monetary policy, the BOJ revealed it would keep a negative interest rate of minus 0.1% on banks’ deposits that transcend reserve requirements along with the purchase of government bonds of about 80 trillion yen so as to maintain 10-year government bond yields approximately 0%.
       As part of its QQE policy, the BOJ also purchases Exchange-Traded-Funds (ETFs) and real estate investment trusts (J-REITs) so the outstanding sums increases at an annual rate of roughly 6 trillion and approximately 90 billion yen, respectively.