Bank of Japan Keeps Policy Unchanged in September


At the Monetary Policy Meeting held on September 5th, the Policy Board of the Bank of Japan decided to maintain the monetary policy unchanged revising up its assessment of the economy. The monetary base will continue to increase at an annual pace of about 60-70 trillion yen.

Excerpt from the Bank of Japan's statement:

With regard to the asset purchases, the Bank will continue to purchase Japanese government bonds 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 and Japan real estate investment trusts 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.

Japan's economy is recovering moderately. Exports have generally been picking up and business fixed investment is starting to recover as corporate profits have improved. Public investment has continued to increase, and the pick-up in housing investment has become evident. Private consumption has remained resilient, with some improvement observed in the employment and income situation. On the price front, the year-on-year rate of change in the consumer price index (CPI, all items less fresh food) is in the range of 0.5-1.0 percent. Inflation expectations appear to be rising on the whole.

With regard to the outlook, Japan's economy is expected to continue a moderate recovery. The year-on-year rate of increase in the CPI is likely to rise gradually. 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 Policy Unchanged in September


BoJ | Nuno Fontes | nuno@tradingeconomics.com
9/5/2013 9:19:03 AM