Thursday, May 21, 2015

BOJ maintains stance, economy recovering moderately

    Japan's central bank maintained its target for boosting the country's monetary base by an annual 80 trillion yen and repeated its long-held view that the economy was "expected to continue recovering moderately."
    The Bank of Japan (BOJ), which last month pushed back its target for achieving 2 percent inflation and trimmed its growth forecast, also repeated that inflation, excluding the effects of last April tax rise, was around 0 percent but inflation expectations appeared to be rising.
    The BOJ embarked on "qualitative and quantitative easing" in April 2013 to rid the country of 15 years of deflation but last year's fall in oil prices has made it more difficult to boost inflation.
    In its quarterly update on April 30 the BOJ said it expects inflation to hit 2 percent in the first half of fiscal 2016, which begins on April 1 next year, instead of in the current fiscal year.
    The forecast for headline inflation for fiscal 2015 was trimmed to an average of 0.8 percent from the previous forecast in January of 1.0 percent and for fiscal 2016 inflation was seen hitting 2.0 percent, down from the previous forecast of 2.2 percent.
    In March Japan's consumer price inflation rate rose to 2.3 percent from February's 2.2 percent.
    Although the BOJ also cut its growth forecast, data this week showed first quarter 2015 growth above expectations, with signs of a pickup in exports and housing. Gross Domestic Product in the first quarter expanded by 0.6 percent from the fourth quarter of 2014 but on an annual basis, GDP still contracted by 1.4 percent, the fourth consecutive quarter of shrinkage.
    For fiscal 2015 the BOJ expects GDP growth of 2.0 percent, down from its January forecast of 2.1 percent, and growth in fiscal 2016 of 1.5 percent, down from the previous forecast of 1.6 percent.
    On Monday Eiji Maeda, the BOJ's chief economist, said the economy was likely to shift to an expansionary phase this fiscal year due to improving domestic demand, exports and the benefits from last year's decline in oil prices.
    In today's statement on monetary policy the BOJ said business fixed investment had been on a "moderate increasing trend," while public investment had entered a moderate declining trend, private consumption was resilient, housing investment had shown some signs of picking up and industrial production was rising.


Post a Comment