Bank of Japan holds off on more stimulus

Tokyo: The Bank of Japan (BoJ) yesterday held off expanding its stimulus programme and said the world's number three economy was recovering, despite fears a sales tax rise will dent growth.

Policymakers unanimously agreed to hold off any further measures after a two-day meeting.

Investors are now awaiting a press briefing by BoJ governor Haruhiko Kuroda for clues about future measures.

The yen barely moved after the widely expected decision, which comes as the United States Federal Reserve winds down its own stimulus and just over a week after the European Central Bank launched unprecedented easing to counter the threat of deflation in the eurozone.

On forex markets the dollar bought 101.79 against 101.77 just before the announcement.

Japanese central bankers have held steady since launching a huge monetary easing blitz in April last year as they gauge the impact of a recent sales tax hike that has threatened to derail the country's nascent recovery.

Tax increase
Friday, the BoJ acknowledged that consumer demand and factory output had taken a hit after the April 1 tax hike, prior to which millions of shoppers went on a nationwide buying spree.

"Japan's economy is expected to continue a moderate recovery as a trend, while it will be affected by the subsequent decline in demand following the front-loaded increase prior to the consumption tax hike," the bank said in a statement.

Policymakers noted that overseas economies, particularly among major industrialised nations, were also recovering "albeit with a lacklustre performance still seen in part". The BoJ's target of achieving 2.0 percent inflation by next year was also on course, it added.

The BoJ's unprecedented easing has given the deflation-plagued economy a shot in the arm.


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