Bank of Japan Keeps Status Quo

August 10, 2014

The Bank of Japan Board met last Thursday and Friday for a total of five hours 22 minutes and released a statement that retained policy settings.  Since early April 2014, the interest rate has been confined to 0-0.1% and the BOJ has been buying long-term assets, mostly JGBs, to grow the monetary base by JPY 60-70 trillion per year and double the average maturity of the bank’s JGB portfolio to seven years.  The aim is to establish 2.0% core inflation, not just for a moment but in a way that officials can be confident that the target will be maintained even after quantitative and qualitative easing has ended.  Officials downgraded their assessments of exports and industrial production but said the situation of income and jobs growth was a bit better.  A widening rift has developed between the Board’s confidence that its goals will be secured by April 2015 and other analysts who think more stimulus is needed.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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