BoJ keeps policy unchanged despite inflation miss

Alexander Bueso WebFG News | 21 Sep, 2017 13:37 - Updated: 09:00 | | |


Rate-setters at the Bank of Japan kept all their main policy settings in place overnight despite recent stronger-than-expected economic growth, even as inflation continued to fall short of its target by a wide margin.

The main policy rate was kept at -0.1% and the target for the 10-year government bond (JGBs) yield and for JGB purchases at 0.0% and 80trn yen, respectively.

In their policy statement, policymakers in Tokyo said: "Japan's economy is expanding moderately, with a virtuous cycle from income to spending operating. Overseas economies have continued to grow at a moderate pace on the whole. In this situation, exports have been on an increasing trend."

Indeed, in his post-meeting press conference, BoJ chief Haruhiko Kuroda indicated activity had been stronger than the BoJ had anticipated.

However, in an unexpected development, the decision to keep policy unchanged was not unanimous, with newly arrived Goushi Kataoka dissenting, arguing instead for even laxer policy in order to push inflation back towards its 2% target in fiscal year 2019.

Commenting on the outcome of the BoJ's meeting, Marcel Thieliant at Capital Economics said GDP growth appeared on track to hit the central bank's target of 1.8% for the current 2017 fiscal year and 1.4% in the following one, but were quite sceptical that inflation would meet even the BoJ's own recently lowered projections of 1.1% for 2017.

"Over the last six months, the share of analysts who expect the Bank to start tightening before the end of next year has fallen by half," he added.

Acting as a backdrop, on 21 July the BoJ marked down its forecast for the year-on-year rate of gain in 'core' CPI in 2017 from 1.4% to 1.1% and that for 2018 from 1.7% to 1.5%.

In fiscal year 2019, core CPI was seen at the time at 2.3%.

More news

17 Nov Europe close: Stocks slip going into the weekend

Stocks reversed early gains as investors opted to play it safe going into the weekend and the euro edged a tad higher on the back of the political gyrations on Capitol Hill.

17 Nov Europe open: Stocks start slightly higher, analysts wary

Stocks have started the morning trading slightly higher, tracking overnight gains on Wall Street but analysts are worried about buying into Thursday's bounce.

17 Nov London close: Stocks finish week on down note

London's top flight index slipped on Friday, but managed to finish well-off its lows of the session despite renewed Brexit angst as the pound gave back early gains.

17 Nov Kingfisher gets RBC upgrade as 'reasons to be cheerful' in France

DIY retailer Kingfisher has more "reasons to be cheerful" thanks to an improving French outlook, analysts at RBC Capital Markets said on Friday, while clothes seller Supergroup remains "compelling" but its shares have gained a lot in recent weeks.

17 Nov NAV on the rise as Alpha Real Estate Trust turns focus to build-to-rent market

Real estate investment group Alpha Real Trust saw its net asset value (NAV) rise in its first half of trading as it moved to make further investments in build-to-rent projects.

17 Nov Pacific Industrial & Logistics completes sale of Bedford asset

Industrial and logistics-focussed real estate investment trust Pacific Industrial & Logistics has completed the sale of an asset located at Hammond Road, Bedford, for a total consideration of £5.8m, it announced on Friday.

17 Nov DP Poland cuts ribbon on 50th Polish Domino's store

DP Poland, which holds the exclusive master franchise for the Domino’s Pizza brand in Poland, celebrated the opening of its 50th location in the country on Friday.

17 Nov Mercia Technologies makes new investment into Aston EyeTech

National investment group Mercia Technologies has made a new direct investment into Aston EyeTech - a spinout from Aston University, Birmingham - which has developed a range of proprietary hardware and software products in ocular care, it announced on Friday.

17 Nov SimiGon receives final approval for $2m Israeli Air Force order

Modelling, simulation and training solutions provider SimiGon has now received final regulatory approval for a $2m purchase order received from the Israeli Air Force, initially announced on 20 June 2016, it confirmed on Friday.

17 Nov Agriterra losses grow after 'subdued' interest in corn products

Agricultural investment group Agriterra saw losses widen in the first half of its trading year as subdued demand for its maize flour products slashed revenues by more than a third.