Bank Of Japan Keeps Policy Measures Unchanged
By Bhaskar Prasad | November 20, 2012 3:16 PM EST
The Bank of Japan Tuesday kept its key policy rate unchanged and refrained from announcing any monetary easing measures in spite of political pressures to pursue aggressive stimulus steps for reviving economic growth momentum.
With Japan's gross domestic product contracting in the third quarter compared to that in the previous quarter, policymakers are under pressure to further ease monetary policy. The data released earlier this month by the Cabinet Office showed that the country’s GDP, which measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy, shrank to 0.9 percent in the quarter ending Sept. 30, down from a 0.1 percent rise in the previous three months.
Also last week, Japan faced a sudden development on the political scene with Prime Minister Yoshihiko Noda dissolving the Diet ahead of the general elections to be held Dec. 16. Investor confidence rose amid the hope that the main opposition, the Liberal Democratic Party, led by Shinzo Abe, the proponent of aggressive monetary easing measures, would win the next elections.
“The Bank of Japan could also come under pressure to ease further, particularly from the government. However, financial conditions are already very accommodative and have arguably reached a state of saturation. As such, we doubt the Bank will expand its asset purchase program again this year but instead focus on growth-supporting measures such as the recent cheap loans scheme,” Capital Economics said in a note.
Last month, BoJ announced more monetary easing policies and expanded the asset purchase program (APP) by about 11 trillion yen ($138 billion). This brings the total size of the APP to about 91 trillion yen, of which 25 trillion yen is in loans and the remaining 66 trillion yen is for asset purchases. The policy board agreed on a further five-trillion yen each of Japanese government bonds and treasury bill purchases and announced 0.91 trillion yen of purchases of risk assets.
Also earlier this month the central bank assured that it will continue to ease the monetary policy to help the country overcome deflation and return to a sustainable growth path. While the goal of the BoJ is 1 percent in terms of the year-on-year rate of increase in the consumer price index, Japan continued to remain in deflation in September for the fifth straight month.
The central bank noted that exports and industrial production had been relatively weak as overseas economies had moved somewhat deeper into a deceleration phase. It is expecting that exports and industrial production will remain relatively weak for the time being affected by the prolonged state of economic slowdown in China, the situation of the protracted European debt problem and the U.S. economy recovering only at a moderate pace
To contact the editor, e-mail:
Most Popular Slideshows
- ‘Sons of Anarchy’ Season 7 Finale Spoilers: Kurt Sutter On Ending The Biker Series And Picking The Right Song For The Final Ride
- Prince Charles’ Wife Camilla Parker-Bowles In Drug Scandal - Reports
- Prince Harry Kissing Mystery Blond, Cressida Bonas & Camilla Thurlow Are Distant Memory
- St. Louis Rams 28, Seattle Seahawks 26 [PHOTOS]
Join the Conversation
- Vatican 2014 Final Synod Report: Gays Still ‘Unwelcome’ in Catholic Church, LGBT Thankful for First Step
- New Zealand Losing $9.4 Billion Every Year to Fraud
- 5 Cities With The Highest Cost Of Living In 2014
- Ebola ‘Cruise Ship’: Holidaymakers Furious Organisers Hid the Truth About Dallas Health Care Worker
- Canada Conducts Practice Drill Of Ebola Rapid Response Teams, To Send Experimental VSV-BOV Vaccine To WHO
- Galaxy Note 4 vs Redmi Note 2 vs iPhone 6: Samsung in Danger with Depressing Q3
- iOS 8 Jailbreak Release Date Likely this October 2014 with Pangu not Evad3rs Firming Up as Creator
- Apple Inc. (AAPL) Stock Set to Soar Beyond $100 Despite Decline After New iPad Launch
- Top 4 Free-To-Download Apps for Fuller iPhone 6, 6 Plus Experience
- Russia Beefs Up Gold Reserves To Offset Heat of Sanctions And Undercut Dollar
- Battery Saving Android 5.0 Lollipop Feature Extends The Battery Life Of Your Android Device By 90 Minutes And Displays Orange Bar While Power Saving Mode Is On
- Australia's 'No Way' Anti-Asylum Seeker Poster Sparks Outrage