The Bank of Japan kept its ultraloose monetary policy unchanged Tuesday while upgrading its assessment of the domestic economy, citing signs of recovery in exports and investment.
“Last month we mentioned that the economy is starting to pick up, but we have changed our (assessment) to describe the economy as ‘picking up,’ ” BOJ Gov. Haruhiko Kuroda told reporters after the central bank’s two-day Policy Board meeting.
On the recent volatility of the Nikkei 225 stock average and long-term interest rates for Japanese government bonds, Kuroda was unfazed, saying the situation “will eventually regain stability.”
The Nikkei has seen wild turbulence in recent weeks, free-falling approximately 2,000 points after topping the 15,000 mark in mid-May for the first time in over five years.
After the BOJ Policy Board meeting ended around noon Tuesday, the Nikkei quickly dipped more than 200 points and despite a slight recovery ended down 196.58 points.
“I won’t comment on each single (market) development,” Kuroda said, reiterating only that the economy “is on a stable path toward recovery.”
On the government’s growth strategies, Kuroda said the policies being put forward by Prime Minister Shinzo Abe “are appropriate,” but warned it is crucial they be carried out correctly and at the appropriate time.
The Policy Board unanimously agreed to keep its asset buying program unchanged, which includes doubling the monetary base. In a statement released after the meeting, the BOJ said, “Japan’s economy has been picking up” thanks to rising exports as well as public and housing investments.
“Private consumption has remained resilient, assisted by the improvement in consumer sentiment,” the bank also noted.
However, on future risks facing the economy, the BOJ said a “high degree of uncertainty” remains, including concerns over Europe’s economy and growth momentum in the United States and emerging economies.
As for attaining its 2 percent inflation target, the BOJ said that some indicators “suggest a rise in inflationary expectations.”
The massive quantitative and qualitative monetary easing unveiled in April will be pursued while examining “both upside and downside risks to economic activity and prices,” the BOJ said, voicing confidence that the measures will end the nation’s long deflationary spiral.