TOKYO (AFP) – The Bank of Japan on Wednesday held off fresh stimulus, even as weak growth figures this week aggravate concerns about the strength of a recovery in the world’s number three economy.
Policymakers said Japan was seeing a “moderate recovery trend”, after wrapping up a two-day meeting, but they further cut back on their inflation expectations, in a sign that their price targets look increasingly out of reach.
The central bank’s decision to keep its already massive stimulus unchanged was widely expected, but analysts have said weak growth figures may force its hand later this year.
On Monday, official data showed the economy limped out of recession in the last quarter of 2014, with a weaker-than-expected 0.6 per cent expansion between October and December.
That followed two consecutive quarters of contraction that came as an April sales tax rise hammered consumer spending.
However, economists had expected a stronger 0.9 per cent expansion on-quarter, while over the full year the preliminary data showed zero growth, compared with 1.6 per cent in 2013.
“As was widely expected, the Bank of Japan left policy settings unchanged at today’s meeting,” said Marcel Thieliant from Capital Economics.
“Board members upgraded their assessment of industrial production and exports, which they now see picking up. But they also acknowledged the disappointing Q4 GDP data released on Monday by noting that the recovery in private consumption has been sluggish in some areas.”
He added: “The BoJ does not seem to be fully convinced over the strength of the economic recovery, and we still think that policymakers will announce more stimulus in late April.”