BOJ upbeat on economy, leaves monetary policy unchanged

THE Bank of Japan on Thursday stuck to its official line that the Japanese economy is continuing to recover "moderately" despite a second-quarter slump in growth caused by a consumption tax hike and sluggish exports.

It consequently decided to leave monetary policy unchanged for the present.

But in the face of a growing conviction in financial markets that the BOJ will be unable to meet its target of turning long-running deflation into annual consumer price inflation of 2 per cent over the next year, sources close to the central bank acknowledged that the bank may have to "change some scenarios".