Bank of Japan raised its assessment for the economy for the first time since May 2015 and abstain from changes in monetary policy. The deposit rate remains in negative territory of -0.1% and the target level for the yield on 10-year government bonds is about zero. Furthermore, the bank will continue to buy government securities at a pace of 80 trillion yen annually.
The experts from the institution are more optimistic about the Japanese economy after the election of Donald Trump for president of the United States, which helped to weaken the yen. The abrupt change in circumstances even prompted talks that Bank of Japan should not raise interest rates. After the last meeting this year, the central bankers in Tokyo said that third largest world economy continues to recover at a moderate pace.
The rhetoric of the statement was similar to that of the previous meeting on November 1 and also included a slowdown in exports and industry, but the expectations of the bank include improved prospects for exports and industrial production.
The current year was turbulent for the Bank of Japan. In February institution surprisingly decided to introduce negative deposit rate, which was not accepted with enthusiasm by politicians and the public.
The Japanese yen started to appreciate, which hurt the profits of exporters. The concerns about Chinese economy and the surprise decision of Britain to leave the European Union have made investors more cautious, hence the JPY has become even more attractive, as an asset haven. In Japan, prices continued to fall, depressed by cheap oil and weak domestic consumption.
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