16
Jun
More optimism from Bank of Japan
The Bank of Japan (BOJ) has said the Japanese economy has begun
to stop deteriorating, but it has still kept interest rates
unchanged at 0.1%.
The assessment was more optimistic than at last month's meeting,
when it said the economy was continuing to worsen.
It made no change to policies such as buying corporate bonds,
the current programme of which ends in September.
The improved view of the economy had been expected given the
recent rises in factory output.
Conditions 'still terrible'
"We may be seeing a return to growth in Japan later this year so
it is reasonable for the BOJ to upgrade its assessment now," said
Shane Oliver, chief economist at AMP Capital Investors in
Sydney.
"However, conditions are still terrible. Japan and other
economies are still in the midst of a severe recession."
The key question is what will happen to the central bank's
programme of buying bonds later in the year.
In common with many other central banks, the BOJ has been buying
corporate bonds as part of a programme of quantitative easing, to
get more money flowing through the economy.
"As for measures on credit markets, the issuance of corporate
bonds is rising and the bank may start scaling back those steps if
conditions allows after September," said Junko Nishioka, chief
economist at RBS Securities in Tokyo.
But he warned that "although there has been some optimism on the
economy after strong industrial output data, the BOJ is maintaining
a very pessimistic view".
"It said the economy has begun to stop worsening, but it didn't
say it has stopped worsening."
source: www.bbc.co.uk/news Tuesday 16th
June 2009