Japanese Yen extended declines against the US Dollar as the Bank of Japan left its monetary policy unchanged on Friday and gave a more optimistic assessment of the private consumption and growth of foreign economies, signalling its confidence that the export-driven recovery is becoming more profound.
Consumer inflation and retail sales have been rising recently in Japan, while industrial production remained path of a sustainable pickup. Although, curbed Oil prices growth still puts a dent on the growth outlook of the country battling with the recession. However, the head of the regulator Haruhiko Kuroda assured the markets that the Bank of Japan is still far behind the Fed in shrinking a large-scale stimulus package, while inflation in the country is far from the target 2 percent, sources familiar with the bank’s stance said.
“Private consumption shows more and more stability about stable improvements in the labour market and wage situation,” the Bank of Japan said in a statement.
The Friday’s statement looks a lot more optimistic than at the previous meeting in April when the Bank of Japan called consumption “sustainable.”
As expected, the regulator repeated the promise to keep short-term interest rates at minus 0.1 percent, and the 10-year government bonds yields at about zero.
The bank also upheld the obligation to purchase government bonds at a rate that would increase the balance of its assets by 80 trillion yen per year ($ 729.33 billion)
The meeting of the Bank of Japan followed the decision of the US Federal Reserve on Wednesday to raise the key rate for the second time in three months and announce the beginning of tapering off the balance sheet.
Pointing to the growing recovery signs in the emerging economies, the Bank of Japan noted that foreign economies “generally continue to grow at a moderate pace.”
This estimate was also more optimistic than in April when the bank spoke of the emerging economies weakness. The regulator reiterated that the Japanese economy had embarked on a path of moderate expansion.
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