TOKYO: Japan’s central bank gave an upbeat assessment of the world’s number three economy on Thursday, but it flagged risks including “developments” in the US and Chinese economies, as well as Britain’s exit from the European Union.
The Bank of Japan held fire on fresh policy measures in a widely expected decision after a meeting, a day after the Federal Reserve tightened borrowing costs and underscored its confidence in the world’s top economy.
All eyes are now on BoJ governor Haruhiko Kuroda’s afternoon news briefing hoping for some guidance on the bank’s future plans.
BoJ policymakers pointed to a “steady recovery” in Japan’s economy, even as its own efforts to stoke inflation come up short.
“The central bank has little reason to do more now — the economy is perking up, with a tight labour market stoking inflationary pressures and core consumer prices rising again,” said Bloomberg Intelligence economist Yuki Masujima.
Bank policymakers repeated previous concerns about developments overseas, worried about how US President Donald Trump’s protectionist leanings will affect Japan’s trade picture.
“Risks to the outlook include the following: developments in the US economy and the impact of its monetary policy on global financial markets,” the BoJ said in a statement.
It also cited edginess about China’s economy, which last year grew at its slowest pace in a quarter of a century, while Britain’s exit from the EU could have implications for the huge trading bloc.
The US Fed’s rate hike on Wednesday is a potential plus for Tokyo’s growth efforts as it highlights strength in a major market for Japanese products.
Rate rises tend to boost the dollar against the yen, which is good news for the profitability of Japanese firms doing business abroad.— AFP
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