- Bank of Japan
The Bank of Japan refrained from adding more monetary stimulus and expressed more upbeat view on the world's third largest economy, as a rebound in consumption boosted services sector's sentiment to the highest level in a year. The central bank said it will continue to expand the monetary base at an annual pace of 80 trillion yen. The world's third-biggest economy grew 0.6% in the March quarter, preliminary GDP data showed, slightly above the forecast of a 0.4% expansion, and 0.2 percentage points bigger than December-quarter growth. The acceleration of growth was due to modest increases in private consumption, which makes up roughly 60% of Japan's GDP. On an annualized basis, the economy grew 2.4% in the March quarter, picking up from 1.5% in the previous quarter. The central bank also revised up its assessment on household spending and housing investment, two components hurt hard by last year's sales tax hike, underscoring its belief that the economy emerged from doldrums. According to the BoJ, inflation is set to hit the 2% target in fiscal 2016, with tight labour-market conditions and the pressure created on wage growth helping to reach this target. The central bank's forecasts also assume a rise in global fuel prices from current levels. The BoJ bought itself some breathing space last month when it postponed the timing for hitting its inflation target. Yet, the decision also questions its credibility as it jarred with its commitment to reach the price target in "roughly two years" since stepping up stimulus in April 2013.
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