BoJ Keeps Monetary Policy Unchanged
December 18 2019 - 06:28PM
RTTF2
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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