Daily Management Review

Bank of Japan retained economic stimulus


12/21/2017


The Bank of Japan did not change the parameters of monetary policy at the final meeting in 2017. The regulator has retained unprecedented incentives, expecting the growth of steadily low inflation, Bloomberg reports.



Jordan Emery
Jordan Emery
As analysts had expected, the interest rate on deposits of commercial banks in the Central Bank was maintained at minus 0.1%. The target yield of 10-year government bonds of Japan was left at about 0%.

8 of the 9 members of the Board of Governors voted for this. Goushi Kataoka, who joined the board of governors in July, expressed disagreement with the Central Bank’s decision.

Volumes of stimulating the economy also did not change. The regulator will continue to purchase assets for 80 trillion yen ($ 705 billion) per year. This decision was taken unanimously by all members of the Board of Governors.

The policy of the Bank of Japan will increasingly differ from the actions of central banks of other countries. So, the US Federal Reserve is raising interest rates, and the European Central Bank is approaching the normalization of monetary policy.

The Bank of Japan has not changed the parameters of its policy from September 2016, when he began targeting the yield of 10-year government bonds at about 0%.

As previously reported, Japan's GDP in the third quarter grew by 2.5% compared to the same period last year. The economy of Japan has been growing for the seventh consecutive quarter, demonstrating the longest growth since the mid-1990s.

The Tankan Index, which assesses the level of trust among large processing companies, rose to 25 points in the fourth quarter. The indicator has peaked since 2006.

However, inflation in the country remains well below the target level. Prices excluding fresh food in October rose by only 0.8%.

In a statement on Thursday, the Bank of Japan proposed a slightly more optimistic view of business investment and private consumption. The regulator noted a steady increase in employment and income, but stated that inflation expectations remain in the "phase of easing".

Of the 44 economists surveyed by Bloomberg, 19 are expected that the Bank of Japan will begin to normalize the policy next year. This opinion is shared by economists including Barclays and Nomura Securities. Analysts Credit Suisse and Oxford Economics are among the few who predict further easing of the policy of the Central Bank of Japan.

source: bloomberg.com






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