- Bank of Japan
The Bank of Japan kept monetary policy unchanged, after adopting a negative interest rate strategy in January in a bid to underpin inflation and create a virtuous spending cycle. The central bank offered a bleaker view on the world's third biggest economy and warned of waning inflation expectations, noting that global headwinds may justify introducing more stimulus ahead. In line with expectations, the BoJ kept its pledge to expand base money at an annual pace of 80 trillion yen. It also left unchanged a 0.1% negative interest rate it applies to some reserves parked by financial institutions at the central bank. The BoJ said exports and production has been weak due to the effects of the slowdown in emerging economies and said that China posed a risk to the outlook for Japan. The BoJ also revised down its estimate of inflation expectations to say they were "weakening recently," acknowledging that one of the key channels of its massive stimulus programme was not working as well as hoped for.
Meanwhile, Japan's industrial output index posted a strong result on a monthly basis at the beginning of the year, revealing a robust recovery in Japan's factories over January compared with the last month in 2015. Industrial production jumped 3.7% month-on-month in January, the Ministry of Trade, Economy and Industry reported.
© Dukascopy Bank SA