No new easing measures, continuation decided: BOJ

No new easing measures, continuation decided: BOJ

TOKYO - Agence France-Presse
No new easing measures, continuation decided: BOJ

Pedestrians are reflected on a stock quotation board showing Japan’s Nikkei share average outside a brokerage in Tokyo in this photo. REUTERS photo

The Bank of Japan held off fresh easing measures yesterday, saying after a two-day policy meeting that a continuation of steps introduced last month would help Japan overcome deflation.

The central bank said its widely expected decision to stand pat was reached by a unanimous vote by its board.

In early April, the bank’s new management team - hand picked by Prime Minister Shinzo Abe - embarked on a new era of huge asset purchases and massive monetary easing.

At his first meeting as BoJ governor Haruhiko Kuroda, a staunch critic of the previous bank chief’s efforts to kickstart the economy, said he would double the money supply and vowed no let-up in the fight to reverse falling prices.

The bank said in a statement Wednesday that it would continue with the monetary easing, aiming to achieve the inflation target of two percent “as long as it is necessary for maintaining that target in a stable manner”.

“(The bank) will examine both upside and downside risks to economic activity and prices, and make adjustments as appropriate,” it said.

“Such conduct of monetary policy will support the positive movements in economic activity and financial markets, contribute to a rise in inflation expectations, and lead Japan’s economy to overcome deflation that has lasted for nearly 15 years.” The central bank said the world’s third largest economy had already started picking up as exports have stopped falling due to recovering overseas economies.

“Japan’s economy is expected to return to a moderate recovery path, mainly against the background that domestic demand remains resilient due to the effects of monetary easing as well as various economic measures, and that growth rates of overseas economies gradually pick up,” it said.

But the bank acknowledged “there remains a high degree of uncertainty concerning Japan’s economy, including the prospects for the European debt problem and the growth momentum of the US economy as well as the emerging and commodity-exporting economies”.

Japan posts worst April trade deficit

Japan on Wednesday posted its worst April trade deficit as a weak yen ramped up import costs and helped extend the run of monthly shortfalls to the longest in more than three decades.

Data from the finance ministry showed Japan incurred a trade deficit for the 10th straight month in April with the red-ink expanding a worse-than-expected 69.7 percent on year to to 879.9 billion yen ($8.6 billion).

Trade data is a closely watched indicator of Prime Minister Shinzo Abe’s progress in firing up Japan’s export-led economy.

Expectations for Abe’s pro-growth, pro-spending policies have weakened the yen more than 20 percent against the dollar over the past six months and boosted share prices to their highest level in more than five years.

But the latest data could be a sign that a rebound in exports has yet to outweigh higher imports on the back of a weaker yen and greater energy needs.

The deficit was the biggest for the month of April in comparable official data that goes back to 1979 and was also worse than an average shortfall of 620 billion yen forecast by economists polled by the Nikkei business daily.

It was also the longest run of monthly deficits since a 14-month string from July 1979 to August 1980.