BOJ Votes 8-1 to Keep Monetary Policy Steady

The Bank of Japan (BOJ) held off on further stimulus at its policy meeting on Friday, instead reiterating its pledge to increase its monetary base at an annual rate of 80 trillion yen ($660 billion).

Base money represents cash and deposits held by the central bank, which it expands by buying government bonds and risk assets.
The BOJ said that the decision was made in an eight-to-one vote. The central bank will release new long-term economic and price forecasts in its semiannual outlook report due out at 3pm local time. BOJ Governor Haruhiko Kuroda will hold a news conference at 3.30pm to explain the policy decision.

Reuters reported that Kuroda was likely to reveal cuts to the bank’s growth and inflation forecasts for the fiscal year that began in April.

The bank has not expanded its stimulus program since last October, even as falling oil prices and weaker exports, particularly to a slowing China, made it more difficult for Japan to reach the BOJ’s 2 percent inflation target.

Kuroda has argued in the past that the tight job market, by pushing up wages and thus consumer spending, would be sufficient to boost inflation. The governor has noted that consumer prices were trending steadily when energy and food were excluded.

Economists were split on whether the BOJ would pull the policy-easing trigger on Friday, although market bets leaned toward no action after a string of recent positive data.

Factory production rose 1.0 percent in September after two straight month of falls, data showed on Thursday, as robust U.S. and domestic demand for cars and cosmetics made up for weak machinery demand in China.


Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.