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Japan: BOJ Keeps Monetary Policy Steady
Source: http://the-japan-news.com
Source Date: Thursday, December 21, 2017
Focus: Knowledge Management in Government
Country: Japan
Created: Dec 22, 2017

The Bank of Japan kept monetary policy steady Thursday despite growing signs of strength in the economy, signaling that it was in no rush to edge away from crisis-mode stimulus with inflation still distant from its 2 percent target.

The central bank revised up its assessment of private consumption and capital expenditure, underscoring its conviction that recovery in the world’s third largest economy was gathering momentum.

Markets now turn their attention to BOJ Gov. Haruhiko Kuroda’s post-meeting news conference for clues to how quickly the bank will follow in the footsteps of its U.S. and European peers in dialing back stimulus.

While Kuroda is likely to reassure markets the BOJ is nowhere near exiting ultra-loose policy, he may highlight the rising pain prolonged easing was inflicting on banks.

“As long as the government keeps a slightly expansionary fiscal policy the BOJ will keep long-term yields low,” said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management.

“We do, however, need to pay attention to the impact quantitative easing is having on regional banks,” he said, adding that debate on whether to raise the yield targets could emerge in the latter half of next year.

As widely expected, the BOJ kept its short-term interest rate target at minus 0.1 percent and the 10-year bond yield target around 0 percent — wrapping up a year in which the central bank made no change to policy.

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