Bank of Japan holds off on any easingComment on this story
Tokyo - The Bank of Japan on Tuesday stood pat on its monetary easing programme as it assesses the impact of a controversial sales tax rise introduced at the start of the month.
Policymakers, who were wrapping up a two-day meeting, have stood their ground since last April, only making tweaks to the vast programme as it rippled through the world's third-largest economy.
“Japan's economy has continued to recover moderately as a trend, albeit with some fluctuations due to the consumption tax hike,” the BoJ said in a statement.
“Private consumption and housing investment have remained resilient as a trend with improvement in the employment and income situation,” it added.
The move to inject vast sums of money into the financial system is a cornerstone of Prime Minister Shinzo Abe's policy blitz aimed at reversing years of deflation and lacklustre growth.
The yen strengthened slightly on the widely expected announcement, as markets turn their focus to BoJ chief Haruhiko Kuroda's post-meeting press briefing Tuesday afternoon for clues about future easing moves, a week after Japan hiked its national sales for the first time in 17 years.
The levy rise to 8.0 percent from 5.0 percent - seen as crucial to shrinking Japan's huge debt load - has upped speculation that the BoJ would have to expand its scheme, similar to the Federal Reserve's quantitative easing, to a counter an expected slowdown in consumer spending.
The last time Japan brought in a higher sales levy, in 1997, it was followed by years of deflation and tepid economic growth that defined the country's protracted slump.
Kuroda - the former head of the Asian Development Bank who was hand-picked by Abe to help steer his growth bid - has previously said he would not hesitate to expand the BoJ's easing scheme if necessary as he works to reach a 2.0 percent inflation goal by next year.
Analysts have been increasingly sceptical about that timeline, but recent inflation data have suggested efforts to reverse falling prices and lacklustre growth were taking hold. - Sapa-AFP