Bank of Japan: No Policy Change but an Assessment Downgrade

December 21, 2011

After meeting of five hours and 43 minutes over two day in its last scheduled policy vote of 2011, the Bank of Japan Policy Board decided unanimously (9-0) to keep the overnight uncollateralized money rate target range at zero to 0.1% and the size of the asset purchase plan, which was last raised in October, at JPY 60 trillion. 

As at the prior November meeting, the group however downgraded its assessment of the economy.  The new statement asserts that “the pick-up in activity has paused, mainly due to the effects of a slowdown in overseas economies and the appreciation of the yen.”  The statement foresees this pause and zero core inflation continuing “for the time being.”  In subsequent remarks, Governor Shirakawa said he doesn’t know when the predicted resumption of recovery will resume.  Business sentiment is improving more slowly, and exports and industrial production now show more or less flat trajectories.  The first Policy Board meeting of 2012 is scheduled for January 23-24.  An interim assessment with new forecasts will be published at that time.

Copyright 2011, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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