The Bank of Japan concluded its February policy meeting on Thursday, deciding to stay steady after announcing an indefinite easing program just last month. While on the same day as the revelation of Japan’s third consecutive economic recession during the fourth quarter of 2012, the BOJ gave a positive assessment of the future due to the recent weakening of the yen.
Japan’s central bank will keep its policy rates between zero to 0.1%, a move that was expected by analysts. In a statement the BOJ said it appeared the country’s economy was “bottoming out,” meaning it was reached its low and will now start to improve, a better outlook than last month when it said the situation was still worsening. The BOJ’s current stance is that it will continue its zero-rate policy and asset purchase program “until deemed necessary,” an intentionally vague statement that gives them the flexibility to decide on how and when to call them off. This is most likely why a proposal was shut down in an 8-1 vote that would state the interest rates would only be held until a 2% inflation was reached.
The doubling of the inflation target to 2% was first announced last month, along with keeping the unlimited easing policy. This was the result of significant pressure from Prime Minister Shinzo Abe in his goal to turn the economy around from years of deflation. Since then, the Japanese yen has rapidly weakened, even reaching a 33-month low against the U.S. dollar.[via International Business Times]