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BOJ keeps to rosy view of regional Japan, warns on capex outlook

Thursday, April 7, 2016 - 14:21

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The Bank of Japan maintained its optimistic economic assessment for most regional areas of the country on Thursday, but warned that some companies were putting off capital expenditure because of uncertainty over the global outlook.

[TOKYO] The Bank of Japan maintained its optimistic economic assessment for most regional areas of the country on Thursday, but warned that some companies were putting off capital expenditure because of uncertainty over the global outlook.

In a quarterly report on regional economies, the central bank maintained its assessment for eight out of nine areas and cut its view for the Tohoku North East region.

"While exports and output are showing some weaknesses due to the effect of slowing emerging market growth, capital expenditure is increasing as a trend and private consumption is on a firm note," the BOJ said in a report published after a quarterly meeting of its branch managers.

BOJ governor Haruhiko Kuroda told the meeting that while Japan's economy continues to recover moderately as a trend, the central bank was ready to take additional monetary easing steps if needed to hit its 2 per cent inflation target.

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While most regions said their economies were recovering or expanding moderately, some saw firms slashing capital spending plans reflecting the recent slowdown in emerging market demand, the report said.

"There are some concerns that companies may become cautious in spending on plant and equipment," the report noted, warning that volatile financial markets and uncertainty over the global economy may undermine corporate investment appetite.

A decline in the domestic market because of the rapidly aging population is also discouraging firms from boosting investment, it said.

The report will be among key factors for the BOJ's nine-member board to consider when deciding whether or not to expand monetary stimulus at its next rate review on April 27-28.

REUTERS

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