- Haruhiko Kuroda, BoJ Governor
The Bank of Japan downgraded its outlook on the nation's exports amid escalating geopolitical woes, the second cut of its view on outbound shipments in six months, highlighting the BoJ's fears about the global economy. However, the BoJ Governor Haruhiko Kuroda remained optimistic about the outlook for the world's third-biggest economy, underlining the central bank's conviction that no fresh stimulus is required to combat the impact of a sales tax hike in April. As widely expected, Japan's central bank left its key policy unchanged, under which it has pledged to increase base money by 60 trillion yen to 70 trillion yen a year through aggressive asset purchases to boost the weak economy and drive inflation towards 2% target next year, believing the economy appears to be on track to achieving the goal without further stimulus. It stuck to its overall assessment that the economy is recovering moderately, and upgraded its assessment of incomes and employment. Nevertheless, the central bank also acknowledged "some weakness" in industrial output. While the BOJ already expects Japan's economy to shrink in the second quarter due to the tax hike effect, the contraction may prove to be bigger, while the rebound more modest, than expected given the delay in an export increase and weak household spending.
The Japanese Yen gained to its two-week high versus the U.S. Dollar, as ongoing risk-off sentiment supported the safe haven currency.
© Dukascopy Bank SA