Bank of Japan Leaves Monetary Stimulus Intact, Inflation Accelerates

Hiruki Nakamura
22 Jan, 2014
New York City

The Bank of Japan kept its annual plan to pump between 60 trillion yen and 70 trillion yen intact and left its inflation outlook unchanged. The accompanying statement after a 2-day meeting noted the impact of April sales tax increase on the economy.

[R]4:30 PM Tokyo – The Bank of Japan kept its annual plan to pump between 60 trillion yen and 70 trillion yen intact and left its inflation outlook unchanged. The accompanying statement after a 2-day meeting noted the impact of April sales tax increase on the economy.[/R]

Stocks in Tokyo gained and the yen declined as more economists questioned the need for additional stimulus.

The Bank of Japan left its large monetary stimulus intact and pledged to expand the monetary base by 60 trillion yen and 70 trillion yen annually, after a two-day meeting that ended today.

The Bank of Japan maintained its monetary policy and kept its core consumer price outlook unchanged at 1.9% near its 2% inflation target for fiscal 2015.

The core inflation target excludes the effect of sales-tax increase and the accompanying statement did not refer to economic “uncertainty” as mentioned in prior statements.

The December 20 statement from the BOJ said “there remains a high degree of uncertainty concerning Japan’s economy.”

Consumer prices increased 1.2% in November from a year ago, according to the latest data released by the government and rose at the fastest pace since 2008.

The BOJ statement said core rate of inflation is expected around 1.25% “for some time.”

The statement also noted that the economy has continued to expand at a “moderate” pace and highlighted that the demand has moved in the period forward ahead of sales tax increase in April.

Sales tax is scheduled to increase to 8% in April from the current 5%.

The Nikkei 225 Stock Average rose 25 to 15,820.96 and the Topix index added 3.68 to 1,299.63.

The yen strengthened to 104.04 against the U.S. dollar.

Stocks in Review

Toyota Motor Corp gained 40 yen to 6,340 yen. Honda Motor Co fell 8 yen to 4,121 yen. Nissan Motor Co Ltd slid 3 yen to 958 yen.

Sony slipped 15 yen to 1,756 yen.

Softbank Corp fell 29 yen to 8,845 yen. Fast Retailing Co slumped 280 yen to 38,840 yen.

Okuma Corporation surged 6.5% to 1,134 yen after Mizuho lifted its opinion on stock to “buy” from “underperform.”

Renesas Electronics Corporation declined 3.9% to 590 yen after the semiconductor maker plans to cut about 5,400 positions from 28,459 by the end of March 2016.

Tokyo Steel Manufacturing Co Ltd climbed 4.9% to 592 yen after the steel products maker said net sales in third-quarter ending in December rose 12.7% to 98.08 billion yen.

Net in the nine months swung to a profit 1.4 billion yen compared to a loss of 13.3 billion yen a year ago period.