Members of the Bank of Japan’s monetary policy meeting said that the country’s economic recovery remains on track, minutes from the central bank’s April 7 and 8 meeting revealed on Friday.
The members added that inflation expectations appear to be successfully rising following years of deflation. They added that business investment also looks to be on the uptick as corporate profits improve.
“Japan’s economy has continued its moderate recovery trend. Overseas economies — mainly advanced economies — have been recovering, albeit with a lackluster performance still seen in part,” the minutes said.
At the meeting, the BoJ decided to keep its benchmark interest rate steady at 0.10 percent.
It also decided to conduct money market operations such that monetary base increases at an annual base of 80 trillion yen by an 8-1 vote.
The bank also maintained its asset purchase program unchanged, with the purchases of JGB done such that the outstanding amount will increase at an annual pace of 80 trillion yen.
“Risks to the outlook include developments in the emerging and commodity-exporting economies, the prospects regarding the debt problem and the risk of low inflation rates being protracted in Europe, and the pace of recovery in the U.S. economy,” the minutes said.
The bank maintained its view on export growth as picking up. The bank’s views on business fixed investment, public investment, private consumption and housing investment were all maintained.
Industrial production has been picking up, thanks to the progress in inventory adjustment, the bank said. The bank also noted that business sentiment remains favorable.
The central bank also stated that the annual increase in core consumer prices defined as overall inflation less fresh food was around 0 percent, after stripping off the direct effects of the consumption tax hike. In March, the inflation estimate was at 0-0.5 percent.
Regarding the outlook, the central bank continues to be sanguine, expecting continued moderate recovery. The annual increase in consumer prices is expected at 0 percent, given the impact of declining energy prices.
“Quantitative and qualitative monetary easing (QQE) has been exerting its intended effects, and the Bank will continue with QQE, aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. It will examine both upside and downside risks to economic activity and prices, and make adjustments as appropriate,” the minutes said.
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