The Bank of Japan has finally admitted the fact the sales tax hike has had a notable negative impact on the world's third biggest economy, as industrial production, a key driver of economic growth, was showing signs of weakness. The central bank decided to remain pat on the monetary policy, but eliminated the need to expand it soon. The BoJ policy makers maintained their assessment that the country's economy "continues to recover moderately as a trend". Kuroda also stressed that officials will consider embarking on additional easing measures should the BoJ's goal of reaching 2.0% inflation goal in the next fiscal year becomes difficult.
Meanwhile, markets are concerned that ECB's purchases of ABSs could potentially lead to some troubles in the Euro zone, particularly as securities of periphery countries will not be excluded from the transactions, despite their rating being below investment grade. However, the ECB Vice President Vitor Constancio reassured that the ECB will not buy "junk securities with a high risk of default". He said that 1 trillion euros of asset-backed securities and covered bonds are eligible for purchase. Meanwhile, Chancellor Angela Merkel's government is discussing measures to bolster growth in Germany, the Euro zone's weakening powerhouse, amid increasing odds that Europe's number one economy risks falling into recession.
In Britain, policy makers of the MPC agreed to keep the interest rate at 0.5% and stick to the size of BoE's bond portfolio at 375 billion pounds amid sluggish growth in the neighbouring Euro zone and signs domestic growth is losing steam.
Elsewhere, the minutes from the latest FOMC meeting showed that policy makers are concerned about slowing global growth and a stronger Dollar that poses risks to the nation's economy. As a result officials decided to keep interest rates low for a considerable time. Some officials warned that the U.S. economic growth might be slower than expected if foreign economic expansion is weaker than projected. On top of that, policy makers believe that further strengthening of the U.S. Dollar may hurt exports and weigh on inflation, as a strong currency makes imported goods cheaper adding to deflationary pressure that would keep consumer prices below the Fed's 2% goal.