The Bank of Japan (BOJ) on Tuesday kept its massive monetary stimulus intact, but struck a less optimistic tone on the economy, warning of weakness in factory output. As expected, the BOJ will retain its pledge of increasing base money at an annual pace of 60-70 trillion yen (£343 billion – £400 billion) through purchases of government bonds and risky assets.
But the central bank revised down its assessment of industrial output, acknowledging that a sales hike introduced in April has had a worse-than-expected impact on the economy.
Focus will be on governor Haruhiko Kuroda’s post-meeting briefing later in the day. Earlier on Tuesday, Kuroda maintained that Japan’s positive economic cycle remained in place, but warned of potential risks to growth and stressed that the central bank was ready to ease monetary policy further if the economy and prices undershoot its forecast.
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