BoJ resists pressures to expand stimulus despite fears of recession
07 Oct 2015
Bank of Japan (BoJ) has decided against an expansion of the current stimulus plan even as slowing exports and falling prices of oil and other commodities threatened to delay any spike in inflation rate, from its current level of 0 per cent.
And, despite fears of recession and advice from the International Monetary Fund to stand ready to ease monetary policy further to get Japan's inflation near its target of 2 per cent, BoJ opted to keep monetary policy unchanged.
However, lingering fears of recession will keep the central bank under pressure to ease at a more crucial meeting on 30 October, when it is expected to cut its long-term economic and price forecasts, analysts say.
For now, however, BoJ maintained its optimistic view that while exports and output have been hurt by slowing emerging market growth, Japan's economy continues to recover moderately.
The IMF said if the BOJ wants to get Japan's inflation near its target of 2 per cent it should be ready to ease monetary policy further and soon.
Abenomics, the economic plan by Prime Minister Shinzo Abe, has been famously described as having three arrows to shoot to help spark Japan's economy. Monetary easing was one arrow, but the government hadn't expected to reshoot it.
''The Bank of Japan should stand ready for further easing,'' said the global lender.
The IMF revised it forecasts for Japan's economic growth down from July by 0.2%. It now expects growth of 0.6 per cent this year and 1 per cent for 2016.
The BoJ will hold its crucial policy meeting on 30 October, when it is expected to announce a rate cut.