Japan: Economy: Kuroda Remains Confident: No Need For Additional Measures March 2014
Published 16 April 2014
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The Bank of Japan (BOJ) voted unanimously to maintain its monetary policy unchanged this month. The BOJ maintained its assessment of Japan’s overall economy: it sees the economy ‘recovering moderately’ with inflation being ‘around 1.25%’. Looking forward, the BOJ continues to expect the economy ‘to continue a moderate recovery’ and inflation ‘to be around 1.25% for some time’.
By component, the BOJ upgraded its view on private capital investment and industrial production slightly. However, it slightly downgraded its view on external demand (exports). A shift in off shoring production facilities has resulted in Japanese exports not recovering as fast as many had expected. According to a survey this week by the Cabinet Office, Japan’s production overseas reached a record of over 20% of all production by Japanese firms in FY2012.
Governor Kuroda reiterated at the regular press conference after the Bank’s decision that if there was necessity for the BOJ to adjust current monetary policy, the Bank would implement it without hesitation but that he did not see such need at this moment. Impact of his comment on markets was limited.
0.1 Comment
Many analysts continue to expect the BOJ to implement additional monetary easing in April or (more likely) July by when it may be more evident that the CPI target will not be reached. Kuroda said on 11 March that he expects core inflation (excluding the scheduled VAT increase) will increase to around 1.5% in H2 2014.
0.2 Disclaimer
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