Bank of Japan Keeps Monetary Policy on Hold in November

The Policy Board of the Bank of Japan decided on November 21st by a unanimous vote to keep conducting money market operations so that the monetary base will increase at an annual pace of about 60-70 trillion yen. The Bank said that will continue with quantitative and qualitative monetary easing as long as it is necessary to achieve the price stability target of 2 percent.

Excerpt from the statement by the Bank of Japan:

The Bank will continue to purchase Japanese government bonds so that their amount  outstanding will increase at an annual pace of about 50 trillion yen, and the average remaining maturity will be about seven years. The Bank will purchase exchange-traded funds and Japan real estate investment trusts so that their amounts outstanding will increase at an annual pace of about 1 trillion yen and about 30 billion yen respectively. As for CP and corporate bonds, the Bank will continue with those asset purchases until their amounts outstanding reach 2.2 trillion yen and 3.2 trillion yen respectively by end-2013; thereafter, it will maintain those amounts outstanding.

Japan's economy has been recovering moderately. Overseas economies as a whole are picking up moderately, although a lackluster performance is partly seen. In this situation, exports have generally been picking up. Business fixed investment has been picking up as corporate profits have improved. Public investment has continued to increase, and housing investment has also increased. Private consumption has remained resilient, with some
improvement observed in the employment and income situation. Reflecting these developments in demand both at home and abroad, industrial production has been increasing moderately. Meanwhile, financial conditions are accommodative.

On the price front, the year-on-year rate of change in the consumer price index (CPI, all items less fresh food) is in the range of 0.5-1.0 percent.
Inflation expectations appear to be rising on the whole.
With regard to the outlook, Japan's economy is expected to continue a moderate recovery. The year-on-year rate of increase in the CPI is likely to rise gradually.
Regarding risks, there remains a high degree of uncertainty concerning Japan's economy, including the prospects for the European debt problem, developments in the emerging and commodity-exporting economies, and the pace of recovery in the U.S. economy.

Bank of Japan Keeps Monetary Policy on Hold in November

Bank of Japan | Joana Taborda |
11/21/2013 9:20:27 AM