BOJ Retains Positive Opinion In Spite of Japan Recession

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Apr 10, 2014 // By:admin // No Comment

The Bank of Japan abstained from adding more stimulus as lawmakers revealed that the third largest economy in the world can uphold a recovery even with the sales tax increase brought into effect last week.  

Sticking on to its current financial stimulus on Tuesday, the BOJ was confident that it did not require more supportive measures in order to battle chronic deflation. It retained its positive opinion on the economy, confirming its confidence that the nation is on track to meet its target of 2% inflation by next year April, indicating that no more easing was possible in the near term.

Haruhiko Kuroda, Governor along with his board retained a promise to expand the financial base at a speed of 60 trillion – 70 trillion Yen per year, according to a central bank statement today in Tokyo, which was in line with prediction of all the 36 economists in a survey.  The economical conditions have persisted to recuperate fairly, though with few fluctuations because of the consumption tax increase, according to the BOJ.

Following the unanimous decision of the Central Bank, Kuroda stated, “A positive-cycle mechanism continues to operate in the Japanese economy, supported by firm domestic demand.”

The constant positive stance of Kuroda and the unity of the decision of his board strengthen the opinion that the central bank will not dither in the face of latest soft data in spite of market anticipations that the bank will need to ease a little more in the forthcoming months.  

The Yen deteriorated following the proclamation and at 3:05 p.m, and it was trading at 102.87 a dollar in Tokyo. The Topix index, which has risen 6.6% over the last year, dropped 1.9% today, dropping for the 3rd consecutive day after tech shares regained.

The BOJ noted its own tankan business review previous week that indicated companies facing a bad impact on customers from the increase of sales tax on April 1 when compared to the earlier hike in 1997.

The BOJ stated – “Japan’s economy continues to recover moderately as a trend, albeit with some fluctuations caused by the tax hike. Business sentiment has continued to improve, although some cautiousness about the outlook has been observed.”

The positive attitude of the BOJ lays the foundation for its semi-annual stance on the prices and economy due April 30. So, let’s see the outcome at the end of this month, and how the nation manages to cope up with the numbers.

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