"Japan's economy is recovering moderately. Overseas economies as a whole are generally heading toward a pick-up, although a lackluster performance is partly seen."
- The Bank of Japan
Japanese policymakers declared the economy is recovering, as the Bank of Japan stayed pat on its monetary stimulus, offering a more optimistic assessment of the world's third largest economy. The central bank once again affirmed its decisiveness to pump 60-70 trillion Yen into the economy each year, in an effort to achieve 2% inflation target within two years. The interest rates remained unchanged as well, meeting analysts' expectations. The moderate recovery is underway, as the economy is benefitting from higher exports and a pickup in investment in fixed assets by businesses on the back of higher profits.
Earlier this week the Bank of Japan unveiled that the nation's monetary base has already expanded more than 42% from a year earlier in August, marking an historic high for the sixth consecutive month. Nonetheless, the evidence of broaden recovery is mixed. Hence, the core measure of consumer prices, which strips out only food, increased 0.7% in July, reaching its highest level in almost five years. At the same time, the U.S.-style core inflation, which excludes food and energy costs, stood at -0.1% in the same period. The last but not least, lending activity in the country remains relatively subdued, as total loans rose only 2.2% in July. It means that in case Shinzo Abe wants to make Japan a more attractive place for investment he has to do more to push all sectors of the economy higher.
© Dukascopy Bank SA