MW: Bank of Japan holds steady, raises economic assessment
Central bank pledges continued support, says economy 'is picking up'
TOKYO (MarketWatch) -- The Bank of Japan upgraded its view of the nation's economic outlook Friday, while it unanimously left its overnight call-rate target at 0.1% as widely expected.
The central bank said financial conditions continue to show signs of improvement, exports and productions continue to increase, and the decline in corporate capital outlays appears to be ending.
"Japan's economy is picking up mainly due to various policy measures taken at home and abroad, although the momentum of self-sustaining recovery in domestic private demand remains weak," the bank said in a statement issued after its two-day policy meeting.
Although economic downside risks have diminished somewhat, the bank said it will maintain its accommodative policies and provide steady support to help the economy recovery.
The central bank said its baseline scenario "projects that the pace of improvement of the economy is likely to remain moderate" until around the middle of the fiscal year ending in March 2011. Most analysts expect the BOJ to maintain its extremely accommodative policy at least through the end of 2010.
Japanese government officials have recently stepped up calls for the central bank to do more to support the recovery, after the BOJ actually took steps toward normalizing policy at its last meeting.
The BOJ last month said it will allow its temporary program to purchase corporate bonds and commercial paper expire at the end of December, as scheduled. It extended a low-interest loan program for banks by three months through the end of March, but said that program, too, would then be allowed to expire. See full story on Oct. 30 Bank of Japan decision.
Government data released Monday showed the nation's economy grew more than expected in the July-September quarter, benefiting from the effects of government stimulus.
In real terms -- adjusted for price changes -- gross domestic product rose 1.2% in the quarter from the April-June period, or 4.8% on an annualized basis. Economists had expected a 0.6% on-quarter increase and an annualized increase of 2.2% in the latest period. See full story on Japan GDP.
