-Martin Schulz, Fujitsu Research Institute
The Bank of Japan (BoJ) announced an introduction of additional monetary stimulus at the end of its two-day meeting on Friday. The central bank increased its annual purchases of exchange traded funds (EFT) to 6 trillion yen ($57 billion) from the previous level of 3.3 trillion yen in order to boost inflation and growth, but left its asset-purchase target at 80 trillion yen. Seven out of nine policymakers voted to expand its purchases EFTs. Notably, the BoJ left its key interest rates unchanged at -0.1%, ignoring the administration of Prime Minister Shinzo Abe, who hoped for more aggressive easing measures from the central bank. Japan's central bank adopted negative interest rates in February to reach its 2% inflation target and boost economic growth. Moreover, the central bank stated that the recent Brexit vote, as well as economic slowdown in emerging markets and volatile markets were the main reasons for adopting these measures.
Other data released by the Ministry of Economy, Trade and Industry showed that Japanese retail sales dropped 1.4% year-over-year in June, following the previous month's fall of 2.1% and missing the 1.2% drop forecast. On a monthly basis, retail sales rose 0.2% in the same month, in line with analysts' expectations and up from last month's 0.0% growth.
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