© Crown copyright 2014
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: email@example.com.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/japan-no-new-action-by-the-bank-of-japan/japan-no-new-action-by-the-bank-of-japan
This publication was archived on 4 July 2016
This article is no longer current. Please refer to Overseas Business Risk – Japan
The Bank of Japan leaves its monetary policy unchanged. No hint of any policy change in the near future. However, many commentators observe that the Bank will need to change its policy sooner or later. Growing concerns raised about recent weakening of the yen.
The Bank of Japan (BOJ) unanimously decided to keep its monetary policy unchanged at its policy meeting today. The decision was widely expected. The Bank will continue to purchase Japanese Government bonds (JGBs) at a pace of 50 trillion yen (£286bn) annually to help achieve its inflation target (i.e. 2% in 2015).
The BOJ’s overall economic assessment remains unchanged. It sees a trend of moderate economic recovery, although it downgraded manufacturing production following a fall in domestic demand due to April’s VAT rise and a subsequent inventory adjustment.
At his regular press conference, BOJ Governor Kuroda reiterated that the Bank would not hesitate to take further actions if necessary.
Although Kuroda remains confident in achieving BOJ’s inflation target, most private commentators continue to expect BOJ to change its monetary policy. Some believe that the current easing measures are inadequate and will need to be enhanced to achieve the 2% inflation target. Others expect the Bank to be forced to extend the timing from ‘in 2015’ to a longer-horizon such as by 2018.
A possible further weakening of the Yen could be another consideration when deciding whether there should be additional easing. Some commentators, including Keidanren (=CBI) Chairman Sakakibara believe the Yen falling below 110 Yen/USD may do more harm than good to the overall economy. Yesterday, Korea’s President Park also expressed concerns over the possible negative impact on its economy of the won’s 3.5% strengthening against the yen in Q3. This has also been cited in the context of Samsung’s announcement today that it forecasts a 60% fall in quarterly operating profit. Such concerns may be further exacerbated as tapering ends in the USA.
The purpose of the FCO Country Update(s) for Business (”the Report”) prepared by UK Trade & Investment (UKTI) is to provide information and related comment to help recipients form their own judgments about making business decisions as to whether to invest or operate in a particular country. The Report’s contents were believed (at the time that the Report was prepared) to be reliable, but no representations or warranties, express or implied, are made or given by UKTI or its parent Departments (the Foreign and Commonwealth Office (FCO) and the Department for Business, Innovation and Skills (BIS)) as to the accuracy of the Report, its completeness or its suitability for any purpose. In particular, none of the Report’s contents should be construed as advice or solicitation to purchase or sell securities, commodities or any other form of financial instrument. No liability is accepted by UKTI, the FCO or BIS for any loss or damage (whether consequential or otherwise) which may arise out of or in connection with the Report.