- Barclays Plc.
The Bank of Japan kept its monetary policy unchanged and held off on expanding monetary stimulus, sending the Japanese Yen up and stocks down. The BoJ Governor Haruhiko Kuroda and his colleagues opted to take more time to assess the impact of negative interest rates. Policy makers left unchanged three key easing tools: the 80 trillion yen target for expanding the monetary base through government-bond purchases, the 0.1% negative rate on a portion of the cash banks park at the central bank, and a programme to buy riskier assets including stocks. Separately, they postponed the time frame for reaching a 2% inflation target, to sometime in fiscal 2017, for the fourth delay in about a year.
The BoJ inaction comes despite a further deterioration in Japan's economic landscape since the previous policy meeting held in March. The world's largest economy is at a risk of contracting in the current quarter due to earthquakes that hit the nation's southern areas earlier this month. Moreover, the latest inflation data show consumer prices, including energy prices, dropped 0.3% in March compared with year-earlier levels. Inflation expectations among households are also at the weakest level in three years, while wage growth has slowed as the global slowdown makes businesses more cautious.
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