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BOJ holds policy steady; cuts view on CPI

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The Bank of Japan kept monetary policy steady and stuck to its optimistic view of the economy on Thursday, even as renewed yen rises and slumping stock prices threaten to hurt business sentiment and derail a fragile economic recovery.

[TOKYO] The Bank of Japan kept monetary policy steady and stuck to its optimistic view of the economy on Thursday, even as renewed yen rises and slumping stock prices threaten to hurt business sentiment and derail a fragile economic recovery.

But the central bank offered a slightly weaker view on the outlook for consumer inflation than in April, saying that year-on-year change in the consumer price index is likely to be slightly negative or about zero per cent for the time being.

The central bank maintained its pledge to increase base money, or cash and deposits in circulation, at an annual pace of 80 trillion yen. It also left unchanged the 0.1 per cent negative interest rate it applies to some of the excess reserves that financial institutions park with the BOJ.

The decision on the monetary base target was made by an 8-1 vote. The decision on negative rates made by a 7-2 vote.

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BOJ Governor Haruhiko Kuroda will hold a news conference at 3:30 pm (0630 GMT) to explain the policy decision.

The BOJ stunned markets in January by adding a 0.1 per cent negative interest rate to its massive asset-buying programme, dubbed "quantitative and qualitative easing" (QQE), in a fresh attempt to accelerate inflation to its 2 per cent target.

REUTERS

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