- The Bank of Japan
The Bank of Japan refrained from expanding its massive stimulus programme, hoping the world's third biggest economy can withstand the drag from China's slowdown without extra monetary support. The central bank reiterated its pledge to increase its monetary base at an annual rate of 80 trillion yen. The BoJ said that the decision was made in an eight-to-one vote. However, the BoJ is likely to remain under pressure to step up its already hefty asset-buying scheme as falling energy costs, sluggish exports and a weak recovery in household spending keep inflation considerably below its 2% target. Core consumer prices dropped 0.1% in the 12 months through September, a second monthly decrease, while household spending plunged 1.3% from a year earlier.
In its outlook report, the BoJ said that the nation's economy is likely to continue expanding at a pace above its potential from fiscal 2015 through fiscal 2016. At the same time, the central bank expects core consumer prices to be around 0% for the time being, with the underlying trend in inflation gradually climbing as effects of drop in crude prices dissipate. The timing of reaching the 2% target continues to depend on developments in energy prices. Yet, assuming that crude prices will rise steadily, Japan's inflation is likely to reach the goal around the second half of 2016.
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