Bank of Japan Review

June 16, 2009

The June meeting of the BOJ Policy Board produced no remarkable results.  The overnight target stays at 0.1% where such has been for the past six months, and programs to alleviate corporate financial strains and promote bank lending are to continue as they’ve been.  The vote was 8-0.  The next meetings are scheduled for July 14-15, August 10-11, and September 16-17.  A statement released by the central bank said economic conditions have deteriorated significantly but no longer are worsening and that exports, production, and public investment are now increasing.  Outright recovery and moderating deflation are anticipated to start sometime after the summer.  But uncertainty remains an operative word, and Governor Shirakawa cautioned that it would be premature to raise interest rates or stop unconventional measures to promote liquidity.  Commercial bank reserves at the BOJ have averaged Y 13.0 trillion per day so far this year, up from Y 8.1 trillion in full-2008 and Y 8.6 trillion in 2007 but well below the Y 32.7 trillion norm in 2005, the final year of the earlier period of Japanese quantitative easing.  A chief continuing concern is that final demand will continue to be very weak once inventories get replenished.

Copyright 2009 Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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