The Bank of Japan kept monetary policy steady on Friday and maintained its view that the economy is recovering moderately, encouraged by growing signs that the benefits of its massive stimulus are spreading through broader sectors of the economy.
With the BOJ maintaining its ultra-easy policy even as the U.S. Federal Reserve begins to wind down its own mega-stimulus, the widening interest rate gap between the two economies will help keep the yen weak against the dollar, analysts say.
The dollar struck 104.44 yen on the EBS trading platform on Friday, its highest level since October 2008.
A weak yen benefits Japan's export-reliant economy, and will help the BOJ attain its target of 2 percent inflation target within two years to decisively Lift the country out of a long phase of debilitating deflation.
Governor Haruhiko Kuroda is likely to stress at a post-meeting news conference that the Japanese central bank's resolve to maintain its ultra-loose stimulus even as the Fed begins dialling back its massive asset-buying programme.
As widely expected, the BOJ voted unanimously to maintain its pledge of increasing base money, or cash and deposits at the central bank, at an annual pace of 60 trillion yen (351 billion pounds) to 70 trillion yen.
"Japan's economy is recovering moderately," the central bank said in a statement announcing the policy decision, unchanged from its assessment last month.
But the BOJ slightly tweaked its view on the outlook to signal that it was mindful of the potential pain on the economy from an increase in the national sales tax in April next year.
"The economy is expected to continue a moderate recovery as a trend, while being affected by an increase and subsequent decline in demand prior to and after the consumption tax hike," it said. Last month, the BOJ said the economy is expected to continue recovering moderately.
Source: Reuters
