Japan retains steady hand on rate, stimulus
Print Edition
JAPAN’S central bank opted yesterday to retain its ultra-lax monetary stimulus, citing US policy changes as one of the risks for the global economic outlook.
The Bank of Japan gave no indication it was leaning toward cutting back on the massive purchases of government bonds it is using to support the world’s No. 3 economy by injecting hundreds of billions of dollars into the economy every year.
The BOJ said, as usual, that Japan’s economy was on a “moderate recovery trend.” But it lacks the dynamism seen in the US economy that led the Federal Reserve to raise the federal funds rate on Wednesday by 0.25 percentage points to a range of 0.75 percent to 1 percent.
As expected, the BOJ kept its benchmark policy rate at minus 0.1 percent.
Among risks, it pointed to the potential impact of US monetary policy on global financial markets.
Under Governor Haruhiko Kuroda, the BOJ has sought to spur price increases to stimulate more spending and borrowing by businesses and consumers. But inflation is stuck at about 0 percent, far below the target of 2 percent set four years ago.
Companies are resisting government calls to raise wages enough to entice thrifty consumers into spending more, and Kuroda has given no hint he might seek to tighten credit anytime soon.
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