Bank of Japan maintains record easing

The Bank of Japan maintained its record easing, following a decision by the US Federal Reserve to taper monetary stimulus, which helped weaken the yen to a five-year low against the dollar.

Governor Haruhiko Kuroda's board expanded the monetary base, as it had pledged by an annual 60 trillion to 70 trillion yen today following a two-day meeting in Tokyo.

According to commentators, Kuroda's push for 2 per cent inflation underscored the difference in policy direction between the BOJ and the Fed, which could end its bond-purchase programme next year.

While according to Kuroda, the BOJ was not targeting foreign exchange rates, the yen's 17 per cent slide against the dollar this year was fuelling consumer price gains and boosting profits, helping prime minister Shinzo Abe end 15 years of deflation.

''The correction of an excessively strong yen has been a plus for Japan's economy,'' Kuroda said at a press conference after the meeting. ''Corporate profits have been boosted, sentiment among economic players has turned positive, stocks have risen and growth has accelerated.''

The yen was down 0.2 per cent to 104.43 against the dollar in the evening Tokyo, after earlier reaching 104.59, its weakest level since 2008.

According to the board, the economy had seen moderate recovery and the year-on-year change in the core consumer price index was now at around 1 per cent. According to policymakers, inflation expectations were also rising.

The BoJ expects moderate recovery to continue, even as the annual rate of change in the consumer price index has been rising for the time being. The BoJ renewed its pledge for the continuation of monetary easing as long as it was necessary to maintain inflation near its 2 per cent price stability target.

In April, Kuroda had unveiled the bank's plan for doubling the monetary base in two years, aimed at reversing 15 years of deflation in the country. The indicators so far had suggested that Japan's efforts were bearing fruit.

Japan's key inflation gauge was up at the fastest pace in five years in October, according to government data, revealed last month. The core consumer price index, excluded fresh food, rose 0.9 per cent year-on-year in October, making it the fifth straight monthly gain in the index.

Though the bank said the economy may continue a moderate recovery as a trend, it also pointed out that growth would be affected by the front-loaded increase and subsequent decline in demand before and after the consumption tax hike, planned for April 2014.