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Bank of Japan holds fire

International

Tokyo - The Bank of Japan on Friday held off expanding its stimulus programme and said the world's number three economy was recovering, despite fears a sales tax rise will dent growth.

Policymakers unanimously agreed to hold off any further measures after a two-day meeting. Investors are now awaiting a statement by BoJ governor Haruhiko Kuroda at about 3:30 pm local time (08:30 SA time).

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Bank of Japan Governor Haruhiko Kuroda looks for a reporter asking questions during a news conference at the BOJ headquarters in Tokyo, June 13, 2014. The Bank of Japan kept monetary policy steady on Friday and offered a slightly more upbeat view on overseas growth, signalling confidence the economy is on course to meet its inflation target next year without additional stimulus.

The widely expected move comes as the US Federal Reserve winds down its own stimulus and just over a week after the European Central Bank launched unprecedented easing measures to counter the threat of deflation in the eurozone.

Japanese central bankers have held steady since launching a huge monetary easing blitz in April last year as they gauge the impact of a recent sales tax hike that has threatened to derail the country's nascent recovery.

On Friday, the BoJ acknowledged that consumer demand and industrial production had taken a hit after the April 1 tax hike, prior to which millions of shoppers went on a buying spree.

“Japan's economy is expected to continue a moderate recovery as a trend, while it will be affected by the subsequent decline in demand following the front-loaded increase prior to the consumption tax hike,” the bank said in a statement.

Policymakers noted that overseas economies, particularly among major industrialised nations, were also recovering “albeit with a lacklustre performance still seen in part”.

The BoJ's target of achieving 2.0 percent inflation by next year was also on course, it said. - Sapa-AFP

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