Japan's central bank decided on Wednesday to maintain its current monetary easing measures and left unchanged its assessment of the world's third-largest economy.
After a two-day policy meeting, Bank of Japan's (BOJ) Governor Haruhiko Kuroda and his eight board colleagues voted unanimously to keep its ultra-easy policy introduced April last year, according to a statement released by the BOJ after the meeting.
"The BOJ will conduct money market operations so that the monetary base will increase at an annual pace of about JPY 60-70 trillion (USD 600-700 billion)," the central bank said.
"The BOJ will continue with the 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 said, adding that it will examine both upside and downside risks to economic activity and prices, and make adjustments as appropriate. The BOJ said its monetary easing has been exerting its intended effects, showing its confidence that the country remains on track toward the price stability target.
In April 2013, the BOJ launched a massive monetary easing program to end deflation that has lasted for nearly 15 years and achieve the 2 percent inflation target in fiscal 2015. The measures center on doubling the monetary base and purchases of government bonds in two years as well as to purchase more risky financial assets, including exchange-traded funds and real estate investment trusts. The central bank unchanged its assessment of the domestic economy, saying, "Japan's economy has continued to recover moderately," the same phrase for the eighth straight month. But it said there was the subsequent decline in demand after the consumption tax hike on April 1, from 5 percent to 8 percent.
"Business fixed investment has increased moderately as corporate profits have improved," the BOJ upgraded its view. "Private consumption and housing investment have remained resilient as a trend with improvement in the employment and the income situation, although a subsequent decline in demand following the front-loaded increase has recently been observed," the central bank said.
The bank also said overseas economies -- mainly advanced economies -- are starting to recover, although a lackluster performance is still seen in part. On the price front, the central bank said the year-on-year rate of change in the consumer price index is at around 1.25 percent. "Inflation expectations appear to be rising on the whole." Japan's core consumer price index rose 1.3 percent in April from a year earlier for the 10th straight month of expansion.
With regard to the outlook, the BOJ said Japan's economy is expected to continue a moderate recovery as a trend, while it will be affected by the front-loaded increase following the front-loaded increase prior to the consumption tax hike. It pointed out risks, saying, "Risks to the outlook include developments in the emerging and commodity-exporting economies, the prospects for the European debt problem, and the pace of recovery in the US economy