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  HOME | Business & Economy (Click here for more)

The Bank of Japanís Monetary Policy Remains Unchanged

TOKYO Ė The Bank of Japan (BoJ) kept its program of monetary easing intact on Thursday, aiming to strengthen the Japanese economy and achieve its goal of a stable price rise of around 2 percent to end chronic deflation.

In a decision forecast by experts, the BoJ did not consider it necessary to amend its easing program, complemented by the adoption of a short-term negative interest rate of -0.1 percent for bank deposits and a yield curve control to maintain long-term rates at around 0 percent.

The BoJ decided after its two-day meeting to continue trying to acquire Japanese sovereign debt valued at about 80 trillion yen ($704 billion) per year, so that the Japanese 10-year bond yield, the main benchmark for long-term rates in the Asian country, remains around 0 percent.

The massive asset purchases of the Japanese central bank will continue to focus on the acquisition of listed and real estate funds so that its portfolio grows at an annual rate of 6 trillion and 90 billion yen, respectively.

It will also continue to increase the value of its portfolio in terms of short and long term corporate bonds at an annual rate of 2.2 and 3.2 trillion yen, respectively.

Exports and industrial production will continue their upward trend while capital expenditure of companies continues to rise due to the improvement of corporate profits and good business spirit, the BoJ said in a statement.

Although the bank pointed out that the worldís third largest economy continues its moderate expansion, Japanís Consumer Price Index stood in October at 0.8 percent (excluding fresh food prices due to their high volatility), well below the 2 percent target the bank wants to achieve by 2019.

The BoJ launched an aggressive monetary easing program in 2013 to achieve this inflationary goal, although the drop in oil prices and a global slowdown have forced the bank to delay its deadline and activate other additional measures.

The BoJís continuation plan contrasts with other benchmark monetary policy institutions, such as the European Central Bank (ECB) and the United States Federal Reserve (FED), which recently undertook changes in the direction of their stimulus measures, which were implemented after the 2008 global financial crisis.

The FED has increased interest rates on three occasions this year and has announced three similar rises for 2018, while the ECB will begin to reduce purchases of public and private debt in the eurozone from January onwards.

 

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