The Bank of Japan kept its monetary policy unchanged on Thursday at 0.1% despite the forecasts for growth potentials are indicating a lowered growth while it is also estimated that the country’s economy sloped into an early year recession . Despite being vastly expected the above decision came to the disappointment of analyst who urged for a policy easing, having being touched by the grey data of last month’s devastating earthquake.
According to the bi-annually economic outlook by the BOJ, the earthquake’s recovery process should become accelerated by October while economic estimates for the March 2013 year end, as well as for core consumer price inflation for current fiscal year rose.
The BOJ Governor stated that more time is needed to examine the economic effects of last month’s economic easing, there is uncertainty in the outlook and therefore current focus should be on the downside economic risks from the quake’s impact. Nevertheless he stressed that immediate action will be taken when it is deemed as appropriate.
On the opposite direction the Deputy Governor, Kiyohiko Nishimura, gave the markets something to be happy about when he proposed an expansion of the BOJ asset purchases by 5 trillion yen ($61 billion). Despite the idea being voted down it was viewed as encouraging as it could be interpreted that a possible easing may be in effect even as early as May. The Foreign Exchange Market today as part of the Asian Session has been relatively illiquid so far following today’s Bank Holiday (Showa Day) in Japan.