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BOJ huddles to assess recovery, tax

Kyodo

The Bank of Japan started a two-day policy meeting Wednesday with discussions likely to involve whether to raise its economic assessment on the back of improving economic data while keeping intact its ultraloose monetary policy, and on the possible impact of a sales tax hike next spring.

In its Policy Board meeting last month, the BOJ, which introduced the ultraloose policy in April, lifted its assessment of the economy for the seventh consecutive month, saying it is “starting to recover moderately.” It marked the first time the word “recover” had been used in 2½ years.

The economy appears to be on a recovery track as anticipated by the BOJ, with department store sales increasing 7.2 percent in June from a year earlier. The jobless rate improved to 3.9 percent in June.

On the price front, consumer prices rose in June for the first time in one year and two months, marking a 0.4 percent increase from a year earlier on higher energy prices amid a weaker yen.

It remains to be seen whether the BOJ will decide to lift the assessment again, as some within the bank are cautious about upgrading because they want to monitor developments in corporate investment and production amid a slowdown in growth in China and other emerging economies, sources said.

The nine-member Policy Board is also expected to study the economic impact of the planned consumption tax hike in April. There are some both in and outside the government who believe the rise — from the current 5 percent to 8 percent next April and then to 10 percent in October 2015 — should either be postponed or carried out in smaller steps.