The Bank of Japan left its massive monetary stimulus unchanged on Thursday and maintained its upbeat view on economy despite the sales tax hike hurting spending. The Policy Board of the BoJ governed by Haruhiko Kuroda voted 7-2 to retain the interest rate at -0.1 percent on current accounts that financial institutions maintain at the central bank.

The bank maintained it yield target for 10-year Japanese government bonds at around zero percent.

Further, the bank will purchase JGBs in a flexible manner so that their outstanding amount will increase at an annual pace of about JPY 80 trillion. The BoJ reiterated that it will not hesitate to take additional easing measures if there is a greater possibility that the momentum toward achieving the price stability target will be lost.

While the Bank today reiterated its willingness to cut interest rates further if required, Marcel Thieliant, an economist at Capital Economics, said it will keep rates unchanged for the foreseeable future.

The bank maintained its view on economy, saying it has been on a moderate expanding trend. The BoJ said the impact of global slowdown on domestic demand is set to be limited, instead of increasing.

The bank downgraded its view on industrial production after its sharp fall in October. The bank observed that industrial production declined partly due to the effects of natural disasters. Further, BoJ said public investment increased moderately.

According to BoJ, domestic demand is expected to follow an uptrend driven by highly accommodative financial conditions and active government spending despite the increase in consumption tax.

The global outlook improved since last policy meeting as the US and China made progress in trade talks and rising possibility that the UK will leave the EU with a deal.

Last week, the US Federal Reserve had left its key interest rates unchanged after three straight cuts and the European Central Bank retained its policy at the first policy session chaired by the new chief Christine Lagarde.

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