BOJ says economy recovering moderately


The Bank of Japan (BOJ) on Friday held off announcing any fresh measures to stimulate the economy, offering the upbeat view that it was "recovering moderately" while efforts to stoke inflation were taking hold.

The decision comes days after the bank's closely watched Tankan quarterly survey showed business confidence has soared to a six-year high, underscoring growing optimism among Japanese firms.

However, analysts said the bank would likely have to widen its monetary easing measures if it is going to win its battle against deflation with a sales tax hike due in April.

There had been speculation of an expansion of the asset-purchasing program after figures last week showed a sharp slowdown in July-September growth, which raised concerns about the strength of the economy.

"Japan's economy has been recovering moderately," the BOJ said in a statement, adding that "inflation expectations appear to be rising on the whole".

"The year-on-year rate of increase in the CPI (consumer price index) is likely to rise for the time being."

The yen was little changed after the widely expected announcement. The dollar bought 104.39 yen compared with 104.37 yen earlier Friday, with the greenback bolstered by the U.S. Federal Reserve's announcement Wednesday that it would wind-down its own stimulus from January.

BOJ Governor Haruhiko Kuroda unveiled the BoJ's vast asset-buying scheme in April as part of a broader plan by Prime Minister Shinzo Abe to reinvigorate the economy and eradicate deflation with a policy blitz.

Reversing years of falling prices is a key goal of the BOJ's plan, which aims for 2% inflation in two years, although some analysts are growing increasingly skeptical of that ambitious timeline.

"We maintain our main scenario that the BOJ will have no choice but to ease further in order to achieve the 2% inflation target," Credit Agricole said ahead of Friday's announcement.

October figures showed a key inflation indicator rising at its fastest pace since the late 1990s as Japan sank into years of deflation, which encourages consumers to put off spending in the hope goods will be cheaper down the road, hurting producers.

Cautious firms have been reluctant to usher in widespread pay or capital spending rises after years of lacklustere consumer demand weighed on their expansion.

"Overall, the (October) data suggests that the Japanese economy is emerging from 15 years of almost completely constant deflation, thus there isn't any real reason why the BOJ would need to increase stimulus" right now, said Chris Tedder, analyst at Sydney-based

"However, this may change next year when the government increases the sales tax."

The BOJ referenced April's tax hike to 8% from 5%, saying consumer demand would jump ahead of the rise before dipping afterwards.

While the increase is seen as crucial to chopping Japan's eye-watering national debt -- proportionately the worst among rich nations -- there are fears it will derail its economic recovery.

To counter the threat of higher taxes denting consumer demand, Tokyo has approved a spending package worth almost $54 billion to help prop up the economy, which led growth among G7 nations in the first half of the year.

"While Tokyo is going to alleviate some of the pressure... further support may also be needed from the BoJ if the economy reacts to the tax worse than expected," Tedder said.

© (c) 2013 AFP

©2023 GPlusMedia Inc.

Login to comment

Sounds like some more propaganda such as flows from the prime minister's office.

-1 ( +1 / -2 )

All I heard was sharp slowdown...blah blah blah, act concerned! deny everything! Were moving forward...While the poor in spirit still suffer and are depressed, moderate recovery? How about rapid recovery with stimulus from above...!!!

-3 ( +0 / -3 )

" despite a sharp slowdown in third-quarter growth…"

Yup. And it's probably going to get worse.

-4 ( +0 / -4 )

Recovering? Really? I first heard Obama say that the economy was "recovering" a little over 4 years ago. At this rate, the economy will have fully recovered by the first part of the next century.

The BOJ, like the Fed, are beginning to realize that their easing policies are beginning to have unintended consequences, and are not really having any influence on net growth or recovery. This monetary easing has done wonders on Wall Street, but has had almost no affect at all on Main Street. Yet another new bubble is being created, and we are far from having recovered from the burst of the last one.

-5 ( +1 / -6 )

"The BOJ, like the Fed, are beginning to realize that their easing policies are beginning to have unintended consequences,"

So they would have had more success if they maintained a tight monetary policy? No stimulus amid no GDP growth, eh? Greece-style economics. Now there's a plan for success.

0 ( +1 / -1 )

So more positive news on the economy but we still have to listen to the pessimists who have no idea on how things are going. Because they haven't seen any improvement in their miserable daily income and their petty life, they think things are worse.

Are any of these posters involved in real business or trade or the real economy for that matter?

Thought as much. They have no idea.

-2 ( +1 / -3 )

Of course the BOJ will say this. Otherwise Kuroda would be slapping his own face. Duh.......

0 ( +0 / -0 )

Great news amid an apparent GDP slowdown, but that's expected - Fed tapering also helps.

I feel like these posters just regurgitate what they hear on the news; no independent thought, but understandable coming from people who think stimulus should change their lives instantaneously.

2 ( +2 / -0 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites