"There remains a high degree of uncertainty concerning Japan's economy, including the prospects for the European debt problem ... and the pace of recovery in the US economy"
- The Bank of Japan
As it was widely expected Japanese policymakers held off announcing any fresh stimulus measures to boost economic growth, citing moderate recovery and stressing out that earlier measures to stoke inflation are taking hold. The BoJ considers the current level of stimulus as appropriate, saying 60-70 trillion Yen injections would be enough to achieve 2% inflation target as planned. Reversing decades of falling prices is a key goal for the government and Japanese central bank; however, analysts are getting more sceptical of current ambitious plan. Moreover, the BoJ admitted that headwinds from overseas could throw predictions off course, adding more pressure on Haruhiko Kuroda and his team. So far, the policy has made some success, with core CPI expanding at an annualized pace of 0.7% in September. Moreover, the BoJ expected this indicator to reach 1.9% by the end of this year, just shy of its threshold.
At the same time, subdued exports is another key concern for BoJ officials, who expect that improvement in global economy would lead to a pickup in demand, offsetting a downturn in household spending after the consumption tax hike in April. Despite a list of challenges, last month, the bank revised up its growth forecast, saying the growth would accelerate to 1.5% this year, from 1.3% expected previously.
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