The Bank of Japan maintained record stimulus to keep stoking inflation and boost economic momentum that’s been sapped by a higher sales tax.
The central bank kept its pledge to increase the monetary base at an annual pace of 60 trillion yen to 70 trillion yen ($667 billion), the bank said in a statement today, in line with all 31 economists surveyed by Bloomberg News.
Governor Haruhiko Kuroda said a moderate recovery would continue and indicated a weaker yen would support an economy that faces headwinds after the levy hike triggered the steepest contraction since the 2011 earthquake. Housing (JNHSYOY) investment has continued to fall following the April increase while production has shown some weakness, the BOJ said in a statement.
“Kuroda indicated he wants the yen to weaken further as that will help the economy and the BOJ’s inflation goal,” said Kazuhiko Ogata, chief Japan economist at Credit Agricole SA in Tokyo. “He really wants the government to go ahead with the planned sales-tax hike.”
Japan’s currency dropped after Kuroda said he wouldn’t be surprised if the dollar strengthens against the yen. “I don’t think that would be particularly bad for Japan’s economy,” Kuroda said at a press conference.
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