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APD | Japan keeps ultraeasy monetary policy

Business2020-02-01

ByAPDwriterAliceTheBankofJapan(BoJ)PolicyCouncilhasdecidedtokeepshort-terminterestratesat-0.1%andlong-terminterestratesatbout0%andthecentralbankwillalsocontinue

By APD writer Alice

The Bank of Japan (BoJ) Policy Council has decided to keep short-term interest rates at -0.1% and long-term interest rates at bout 0% and the central bank will also continue the large-scale asset purchase program.

Earlier last week, the BoJ raised its growth forecast for the world's third largest economy, but kept the "super-relaxed" monetary policy.

Regarding economic prospects, the bank predicted that Japan's economy will grow by 0.8% in fiscal 2020 (ending March 2021), higher than the 0.6% forecast made in May last year.

According to the BoJ, the Japanese economy is in a moderate growth trend, although exports, production and business sentiment remain weak, mainly due to natural disasters and the slowdown of the world economy.

It also revised its forecast for real GDP growth in the fiscal years 2020 and 2021 to 0.9% and 1.1%, respectively, from 0.7% and 1% projected previously. 

In terms of price, the BoJ forecast core inflation at only 0.6% in the fiscal year 2019, 1% in the fiscal year 2020 and 1.4% in the fiscal year 2021, much lower than the target of 2%.

BoJ Governor Haruhiko Kuroda said the bank would "not hesitate to implement additional easing measures" if needed.

The central bank raised economic prospects forecasts after Japanese Prime Minister Shinzo Abe last year announced a new fiscal stimulus package to boost the country's economic growth and reduce the impact of consumption tax hike from 8% to 10% from October 1, 2019.

(ASIA PACIFIC DAILY)

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