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19-11-2014, 08:52 PM
BoJ upbeat on economic outlook
DOW JONES NEWSWIRES NOVEMBER 19, 2014 9:15PM
The Bank of Japan has kept its upbeat economic view despite data showing the country had slipped into recession
Following a two-day meeting, the BoJ stood pat on monetary policy -- after expanding its already huge stimulus package last month -- as markets eyed governor Haruhiko Kuroda's reaction to Tokyo's announcements.
But Kuroda -- Prime Minister Shinzo Abe's handpicked central bank chief -- said little about the issue at a post-meeting press briefing on Wednesday, despite earlier calls for Tokyo to press on with tax rises aimed at generating fresh revenue to trim an enormous national debt.
"I'm not going to comment on a decision made by the government," Kuroda told reporters.
"But, generally speaking, it's important to maintain confidence in Japan's finances. I still expect the government will implement measures" to pay down the debt.
He also dismissed suggestions that the BoJ's move to expand its vast easing plan was based on the assumption Tokyo would lift the country's taxes next year.
"I never thought we should have waited more before expanding our monetary easing," Kuroda said.
Tokyo's decision - and Abe's call on Tuesday for a snap election ahead of a party leadership vote next year - came after a sales levy hike in April slammed the brakes on growth just as the deflation-plagued economy appeared to be turning a corner.
The perennially optimistic Kuroda echoed a BoJ statement earlier on Wednesday which said the world's third-largest economy was still on track for a recovery.
Despite its bullish view, however, the central bank was more cautious on inflation expectations, saying that they "appear to be rising on the whole from a somewhat longer-term perspective".
"While board members noted that some weakness on the production side remained, they upgraded their views on exports, housing investment and private consumption," said Marcel Thieliant from Capital Economics.
"However, the BoJ now expects inflation to remain at current levels of 1.0 per cent for the time being, rather than to pick up as in previous statements."
Thieliant added that "the statement suggests additional stimulus in the near-term is not on the cards".
Tsuyoshi Ueno, a senior economist at NLI Research Institute, was surprised at the bank's upbeat tone.
"The growth data have been negative for two quarters in a row, which shows that the economy is in a bad state," he said.
"It seems a bit strange that the central bank kept its view that Japan's economy is recovering."
In forex markets, the yen weakened further with the US dollar at a seven-year high of Y117.38 after the announcement, up from Y116.83 in New York.
The BoJ's decision means it will keep trying to pump cash into the banking system at an annual pace of Y80 trillion ($A844.37 billion), a scheme designed to stimulate the economy.
Last month, the bank surprised markets by announcing it would expand asset purchases by as much as Y20 trillion annually to the current level, sending the yen into freefall.
It also slashed its economic growth forecast by half and trimmed consumer price expectations as a much-touted 2.0 per cent inflation target looked increasingly out of reach.
The GDP data on Monday showed Japan's economy shrank 0.4 per cent, or at an annualised rate of 1.6 per cent, in the July-September quarter, dealing a huge blow to Abe's bid to turn around years of tepid growth, dubbed Abenomics.
The reading was well below market expectations for a 0.5 per cent expansion, and comes after Japan suffered a 1.9 per cent contraction in the April-June quarter - or 7.3 per cent at an annualised rate - as consumers and firms capped their spending.
DOW JONES NEWSWIRES NOVEMBER 19, 2014 9:15PM
The Bank of Japan has kept its upbeat economic view despite data showing the country had slipped into recession
Following a two-day meeting, the BoJ stood pat on monetary policy -- after expanding its already huge stimulus package last month -- as markets eyed governor Haruhiko Kuroda's reaction to Tokyo's announcements.
But Kuroda -- Prime Minister Shinzo Abe's handpicked central bank chief -- said little about the issue at a post-meeting press briefing on Wednesday, despite earlier calls for Tokyo to press on with tax rises aimed at generating fresh revenue to trim an enormous national debt.
"I'm not going to comment on a decision made by the government," Kuroda told reporters.
"But, generally speaking, it's important to maintain confidence in Japan's finances. I still expect the government will implement measures" to pay down the debt.
He also dismissed suggestions that the BoJ's move to expand its vast easing plan was based on the assumption Tokyo would lift the country's taxes next year.
"I never thought we should have waited more before expanding our monetary easing," Kuroda said.
Tokyo's decision - and Abe's call on Tuesday for a snap election ahead of a party leadership vote next year - came after a sales levy hike in April slammed the brakes on growth just as the deflation-plagued economy appeared to be turning a corner.
The perennially optimistic Kuroda echoed a BoJ statement earlier on Wednesday which said the world's third-largest economy was still on track for a recovery.
Despite its bullish view, however, the central bank was more cautious on inflation expectations, saying that they "appear to be rising on the whole from a somewhat longer-term perspective".
"While board members noted that some weakness on the production side remained, they upgraded their views on exports, housing investment and private consumption," said Marcel Thieliant from Capital Economics.
"However, the BoJ now expects inflation to remain at current levels of 1.0 per cent for the time being, rather than to pick up as in previous statements."
Thieliant added that "the statement suggests additional stimulus in the near-term is not on the cards".
Tsuyoshi Ueno, a senior economist at NLI Research Institute, was surprised at the bank's upbeat tone.
"The growth data have been negative for two quarters in a row, which shows that the economy is in a bad state," he said.
"It seems a bit strange that the central bank kept its view that Japan's economy is recovering."
In forex markets, the yen weakened further with the US dollar at a seven-year high of Y117.38 after the announcement, up from Y116.83 in New York.
The BoJ's decision means it will keep trying to pump cash into the banking system at an annual pace of Y80 trillion ($A844.37 billion), a scheme designed to stimulate the economy.
Last month, the bank surprised markets by announcing it would expand asset purchases by as much as Y20 trillion annually to the current level, sending the yen into freefall.
It also slashed its economic growth forecast by half and trimmed consumer price expectations as a much-touted 2.0 per cent inflation target looked increasingly out of reach.
The GDP data on Monday showed Japan's economy shrank 0.4 per cent, or at an annualised rate of 1.6 per cent, in the July-September quarter, dealing a huge blow to Abe's bid to turn around years of tepid growth, dubbed Abenomics.
The reading was well below market expectations for a 0.5 per cent expansion, and comes after Japan suffered a 1.9 per cent contraction in the April-June quarter - or 7.3 per cent at an annualised rate - as consumers and firms capped their spending.