Minutes from the latest BoJ meeting showed the central bank is not going to rule out the possibility of early additional stimulus if the domestic economy show signs of stumbling. At the same time, the BoJ does not exclude the possibility domestic demand will fluctuate after the sales tax hike in April. The central bank headed by Haruhiko Kuroda unanimously decided to stay pat on its monetary policy, leaving the pace of the stimulus programme unchanged at 60-70 trillion yen per year, leaving it unchanged for 11th consecutive month. According to the minutes, vast majority of members agreed that consumer prices will follow a rising trend in the future, reflecting factors like stronger demand and supply as well as an increase in inflation expectations. The inflation rate is projected to hit 2% level by the fiscal 2015 year.
While the central bank still supports the chosen course and a set of measures to revive growth in the world's third largest economy, the nation's swelling trade deficit adds to sinking consumer mood, threatening to undermine Shinzo Abe's bid to boost growth and inflation. Last week, Credit Suisse Group AG downgraded its 2014 economic outlook for japan to 1.6% from 2.2% expected earlier. While the yen's 18% depreciation against the buck pushed corporate profits to record high, inflation boosted by higher import costs is poised to squeeze Japanese households.
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