The Bank of Japan says that the country is beginning to moderately recover, upgrading its assessment of the economy. It is also the first time since the earthquake and tsunami disaster of January 2011 that they have used the word “recover” when pertaining to economic conditions in Japan.
“Japan’s economy is starting to recover modestly,” read a statement from the BOJ after a two-day policy meeting. The central bank also decided to maintained its vast monetary easing program which they started in April as part of their efforts to reverse 15 years of deflation and falling prices. They are sticking to its optimistic outlook as well for fiscal year 2015. However, in a cautious move, they also decided to slightly decrease its inflation projections for the current fiscal year as well as the next. They also cut the growth forecast for this year and the next two years.
In the three months since BOJ Governor Haruhiko Kuroda implemented a momentous shift in the bank’s policy in order to reach the ultimate goal of 2% inflation, Japan’s economy has been improving through exports taking advantage of the weakened yen and a steady increase in consumer spending. The easing program is expected to remain unless there will be signs that more needs to be done to reach that inflation goal tasked to the BOJ by Prime Minister Shinzo Abe.
Board member Takahide Kiuchi proposed in the policy meeting that the inflation target should be more flexible and the 2% should be implemented in “the medium to long-term” while the easing program should be seen as an “intensive measure” that will be implemented for about two years. However, his proposal was turned down, 8-1. The BOJ says it expects the economy to continue its moderate recovery due to the increasing domestic demand as well as the “pick-up in overseas economies.”
[ via Wall Street Journal ]