International News

TOKYO, June 16, (APP/AFP) – The Bank of Japan held
steady on monetary policy Friday as questions mount about when the central bank will start pulling the plug on its massive monetary easing campaign.
Policymakers said the world’s number three economy was picking up and
they decided to leave an 80 trillion yen ($719 billion) annual asset-buying scheme unchanged — days after the US Federal Reserve hiked interest rates and signalled further tightening.
The dollar was at 111.20 yen in afternoon trade, up from levels
around 111 yen before the announcement.
Japan’s central bank has not made a significant move for the past
five policy meetings, as the economy enjoys its longest run of expansion for more than a decade.
But the growth trend has been shaky and consumer prices remain way
below the BoJ’s two percent inflation target.
The central bank now expects to reach its inflation target by 2019 —
four years later than originally planned — and economists are increasingly doubting if it has the tools to achieve its promise.
The price target is a cornerstone of efforts to reverse years of slow
growth and deflation that followed the collapse of an equity and property
market bubble in the early 1990s.
BoJ governor Haruhiko Kuroda, who will speak to reporters later
Friday, has said he would not slow down his monetary easing programme until it achieves the inflation goal.
But there have been growing concerns about the BoJ gobbling up huge
amounts of government bonds central to its easing plan.
“With concerns about the BoJ’s bloated balance sheet being raised
even in the national Diet (parliament), the market seems to be starting to see the risk that the BoJ might be forced to exit the current policy framework even before inflation improves much,” BNP Pariba economist Ryutaro Kono said in a commentary before Friday’s decision.