Thursday, March 7, 2013

Japan holds rate steady at Shirakawa's final meeting

    The Bank of Japan (BOJ) kept its benchmark overnight call rate steady at 0 to 0.1 percent, as widely expected, and repeated that it would "pursue aggressive monetary easing" to meet its new 2.0 percent price stability target by keeping interest rates at virtually zero and buying financial assets.
    It was the last BOJ meeting chaired by Governor Masaaki Shirakawa who is being replaced by Haruhiko Kuroda, expected to pursue a much more aggressive strategy to help defeat deflation which has dogged Japan for almost two decades.
    In its statement, the BOJ said Japan's economy had now stopped weakening and overseas economies showed signs of picking up even if they still remain in a phase of deceleration. 
   "With regard to the outlook, Japan's economy is expected to level off more or less for the time being, and thereafter, it will return to a moderate recovery path mainly against the background that domestic demand remains resilient partly due to the effects of various economic measures and overseas economies gradually emerge from the deceleration phase," the BOJ said.
    Japan's Gross Domestic Product contracted by 0.1 percent in the fourth quarter from the third, narrower than the third quarter's 1.0 percent shrinkage, for an annual fall of 0.1 percent. 
    Inflation remained negative in January for the eighth month in a row with consumer prices falling by 0.3 percent.


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