BOJ Raises Its Assessment on Capital Expenditure

The Bank of Japan kept monetary policy steady and raised its assessment on capital expenditure on Wednesday, reassured by growing evidence the economy can withstand the pain from a sales tax hike without additional monetary stimulus.

Governor Haruhiko Kuroda was expected later in the day to reiterate his optimism that Japan is on course to meet the bank’s 2 percent inflation target about a year from now, dampening already diminishing market expectations of near-term monetary easing.

Such comments may further strengthen the yen, which held near a 3-1/2-month high against the dollar as hopes of further BOJ action faded, analysts say.  The BOJ also added a line in its statement stressing that its quantitative easing policy has been “exerting its intended effects” and removed a phrase describing Japan as in deflation, underscoring its confidence about meeting its price target without additional stimulus.


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