Bank of Japan Keeps Monetary Policy Unchanged


At the Monetary Policy Meeting held July 11, the Policy Board of the Bank of Japan stated that the economy is on recovery path and decided to maintain the current quantitative easing policy. The monetary base will continue to increase at an annual pace of about 60-70 trillion yen.

The Bank will purchase Japanese government bonds (JGBs) so that their amount outstanding will increase at an annual pace of about 50 trillion yen, and the average remaining maturity of the Bank's JGB purchases will be about seven years. The Bank will purchase exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs) so that their amounts outstanding will increase at an annual pace of about 1 trillion yen and about 30 billion yen respectively. As for CP and corporate bonds, the Bank will continue with those asset purchases until their amounts outstanding reach 2.2 trillion yen and 3.2 trillion yen respectively by end-2013; thereafter, it will maintain those amounts outstanding. 

Japan's economy is starting to recover moderately. Exports have been picking up, business fixed investment has stopped weakening and shown some signs of picking up as corporate profits have improved. Public investment has continued to increase, and the pick-up in housing investment has become evident. On the price front, the year-on-year rate of change in the core consumer price index is currently 0 percent. 

With regard to the outlook, Japan's economy is expected to recover moderately on the back of the resilience in domestic demand and the pick-up in overseas economies. The year-on-year rate of change in the CPI is likely to turn positive. 

Regarding risks, there remains a high degree of uncertainty concerning Japan's economy, including the prospects for the European debt problem, developments in the emerging and commodity-exporting economies, and the pace of recovery in the U.S. economy

The Bank will continue with quantitative and qualitative monetary easing, aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. It will examine both upside and downside risks to economic activity and prices, and make adjustments as appropriate.

Bank of Japan Keeps Monetary Policy Unchanged


BoJ | Nuno Fontes | nuno@tradingeconomics.com
7/11/2013 8:55:14 AM