Japan's central bank decided Thursday to continue its monetary policy and left unchanged its assessment of the world's third-largest economy, amid recovery in consumption and exports on the back of a weak yen and rising stocks.
At a two-day policy meeting, Bank of Japan's (BOJ) Governor Haruhiko Kuroda and his eight board colleagues voted unanimously to maintain its drastic monetary measures introduced three months ago, according to a statement released by the BOJ after the meeting.
"The BOJ 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," the central bank said. But the BOJ refrained from taking additional steps, saying it will" examine both upside and downside risks to economic activity and prices, and make adjustments as appropriate." In April, the central bank decided to double the monetary base at an annual pace of about JPY 60-70 trillion (USD 600-700 billion) and the purchases of government bonds in two years to spur economic growth and overcome the country's long-standing deflation. The measures also included more purchases of risky financial assets, including exchange-traded funds and real estate investment trusts.
The central bank maintained its view on Japan's economy for August after upgrading it for seven consecutive months, saying, "The economy is starting to recover moderately." In July, the BOJ used the word "recover" to describe the state of the country's economy for the first time since January 2011, two months before the March 11 earthquake-tsunami disaster devastated the country. "Inflation expectations appear to be rising on the whole. The year-on-year rate of increase in the consumer price index is likely to rise gradually," the BOJ said.
With regard to the outlook, the BOJ said Japan's economy is expected to recover moderately on the back of the resilience in domestic demand and the pick-up in overseas economies.
It also pointed out risks to the country's economy, saying "there remains a high degree of uncertainty," including the prospects for the European debt problem, developments in the emerging and commodity-exporting economies, and the pace of recovery in the US economy.
The central bank's drastic monetary easing steps are in line with Prime Minister Shinzo Abe's aggressive economic policies called "Abenomics," which aim to overcome deflation that has lasted more than 15 years and to boost the Japanese economy.