BoJ voices optimistic economic assessment

The Bank of Japan kept its optimistic economic assessment and massive stimulus programme unchanged, reflecting its belief that inflation will pick up toward 2% price growth without extra monetary easing. In line with economists' expectations, the BoJ reiterated its pledge to raise base money, or cash and deposits at the central bank, at an annual pace of 80 trillion yen via purchases of government bonds and risky assets. 

Many analysts expect economic output data, due out on August 17, to show the world's third biggest economy contracted in the three months through June. While growth is expected to recover in the current quarter, some economists warn that sluggish demand in China and weak wage growth in Japan will keep any pick-up limited. The central bank has been highlighting indicators showing inflation pressures building. One measure, which strips out fresh food as well as energy costs that have dragged its main gauge to near 0%, showed inflation rising to 0.7% in May. Renewed drops in oil prices, which slid to six-month lows this week, could be a concern for the BoJ. While Kuroda said that cheaper gasoline prices will boost growth by spurring household spending power, the depressing effect on inflation expectations was a factor the BoJ referred to last October when it expanded its asset purchase programme.