Bank of Japan Keeps Policy on Hold in October


At the Monetary Policy Meeting held on October 4th, the Policy Board of the Bank of Japan decided to maintain the monetary policy unchanged underlying the economy's moderate recovery. 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. Overseas economies as a whole are gradually heading toward a pick-up, although a lackluster performance is partly seen. In this situation, exports have generally been picking up. Business fixed investment has been picking up as corporate profits have improved. Public investment has continued to increase, and housing investment has also increased. 

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

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 on Hold in October


BoJ | Nuno Fontes | nuno@tradingeconomics.com
10/4/2013 11:11:38 AM