ZCZC
BCN-19
JAPAN-ECONOMY-BANK
Bank of Japan gloomier on economy but maintains policy
TOKYO, March 15, 2019 (BSS/AFP) – The Bank of Japan issued a more downbeat
assessment of the world’s third biggest economy Friday, 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-percent 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 percent 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-percent 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 percent a
year, but it expects inflation for the fiscal year ending next March of 0.9
percent.
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 percent, the
sharpest drop since January 2016.
BSS/AFP/HR/1050