Article by ForexTime
The Bank of Japan (BOJ) announced after a two-day policy meeting on Thursday that it decided to keep its current monetary policy unchanged. The central bank stuck to its pledge to increase the money base by 60-70 trillion yen per year via aggressive asset purchases, mostly in Japanese government bonds.
This was a widely expected decision despite a contraction in the second quarter that underlined the damage inflicted by an April sales tax hike. The April-June quarter saw the Japanese economy suffer its deepest quarterly contraction since the 2011 quake. The April’s sales tax hike was the main catalyst. GDP fell 1.7 percent.
The BoJ refrained from announcing fresh stimulus although there is increasing evidence the recovery in the world’s third-biggest economy is sputtering. For the past 20 meetings, the BoJ has held off making any major adjustments to its stimulus that was launched in April 2013, despite growing calls to act in the face of softening data.
However, the BoJ is optimistic because corporate profitability is very high and wages are still growing to some extent. Based on this, it is expected that growing income will stimulate spending.
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