Review of Bank of Japan Meeting: Policy Left Unchanged

November 21, 2013

The Bank of Japan statement after this month’s 5 hour and 9 minutes-long two-day meeting is almost an identical replica of the October 4 statement.  The only change of significance was an upgrade in the view of overseas economies from “on the whole gradually heading toward a pick-up” expressed a month ago to new language stating “on the whole picking up moderately.”  Governor Kuroda picked up on this more optimistic tone in the subsequent press conference and said there’s no need to change policy settings now because price and growth trends agree with the BOJ’s expectations of a moderate continuing recovery and gradually rising inflation.  If actuality deviates in the future from the Board’s projected path, officials will augment its program of plentiful quantitative stimulus.  Since the plan was launched in early April, the central bank has been buying assets at a rate of 60-70 trillion yen per year and has kept overnight interest rates between zero and 0.1%.  The statement noted again that “inflation expectations appear to be rising on the whole.”  Abstracting from the effect of a planned sales tax hike to 8%, core CPI is projected to climb 1.3% in fiscal 2014 followed by 1.9% in fiscal 2015, which ends in March 2016.  Bank officials anticipated GDP expansion of 1.5% in each of those fiscal years.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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