The Bank of Japan has voted by an 8-1 majority to keep its current monetary policy strategy of quantitative and qualitative easing (QQE) intact.
At the latest monetary policy meeting the bank agreed to continue increasing the monetary base by roughly 80trn yen a year, while its purchases of Japanese government bonds will continue to “increase at annual pace of about 80trn yen”.
In a statement the bank noted the economy “has continued to recover moderately”, with exports picking up and corporate profits improving. It argued that private consumption in the country has been “resilient” while housing investment “has bottomed out and shown some signs of picking up”.
In terms of inflation the central bank acknowledged the year-on-year rate of increase in the consumer price index, less fresh food, and excluding the direct effects of the consumption tax hike last year is roughly zero per cent. It states this is likely to be the case “for the time being due to the effects of the decline in energy prices”.
But it added that inflation expectations “appear to be rising on the whole from a somewhat longer-term perspective”.
While the bank argues the QQE “has been exerting its intended effects” it continued to reiterate its stance to maintain QQE in order to achieve its 2 per cent inflation target “as long as it is necessary”.
