TOKYO, March 15 — The Bank of Japan (BoJ) issued a more downbeat assessment of the world’s third biggest economy today, as a broader global slowdown impacts exports and production.
The central bank kept its ultra-loose monetary policy in place after a two-day policy board meeting, as it battles to safeguard fragile growth and kindle inflation that is stuck stubbornly below its two-per cent target.
The bank added to its monetary policy statement the view that “exports and production have been affected by the slowdown in overseas economies”.
But the BoJ also argued that “Japan’s economy is expanding moderately” and maintained its aim of keeping the short-term policy interest rate around minus 0.1 per cent and the yield on 10-year bonds around zero.
BoJ Governor Haruhiko Kuroda will meet the press later in the day to discuss his decision.
“The central bank’s stated goal remains two-per cent inflation and current price levels are not high enough to justify tightening,” said Katsunori Kitakura, lead strategist at Sumitomo Mitsui Trust Asset Management, before the decision.
“While the risk of a global economic slowdown exists, monetary policy in Japan has gradually shifted from ‘normalisation’ to ‘further relaxation’.”
Kuroda has come under fire over the effectiveness of his monetary easing programme and how he intends to return the bank’s policy to normal.
In January, the governor was forced to revise down the BoJ’s inflation forecasts, a step seen as further evidence that authorities are unable to boost prices.
The bank wants to achieve stable growth with prices rising two per cent a year, but it expects inflation for the fiscal year ending next March of 0.9 per cent.
The central bank’s measured downgrade of the Japanese economy comes as economists are increasingly viewing China with caution.
Beijing’s decelerating exports and imports, as it battles a tense trade row with the United States, have contributed to Japan’s expanding trade deficit, with China-bound exports in January falling 17.4 per cent, the sharpest drop since January 2016. — AFP
Source: The Malay Mail Online