Bank of Japan gloomier on economy but maintains policy

TOKYO: The Bank of Japan issued a more downbeat assessment of the world’s third biggest economy Friday, as a broader global slowdown impacts exports and production.

The central bank kept its ultra-loose monetary policy in place after a two-day policy board meeting, as it battles to safeguard fragile growth and kindle inflation that is stuck stubbornly below its two-percent target.

The bank added to its monetary policy statement the view that “exports and production have been affected by the slowdown in overseas economies”.

But the BoJ also argued that “Japan’s economy is expanding moderately” and maintained its aim of keeping the short-term policy interest rate around minus 0.1 percent and the yield on 10-year bonds around zero.

BoJ Governor Haruhiko Kuroda will meet the press later in the day to discuss his decision.

“The central bank’s stated goal remains two-percent inflation and current price levels are not high enough to justify tightening,” said Katsunori Kitakura, lead strategist at Sumitomo Mitsui Trust Asset Management, before the decision.

“While the risk of a global economic slowdown exists, monetary policy in Japan has gradually shifted from ‘normalisation’ to ‘further relaxation’.”

Kuroda has come under fire over the effectiveness of his monetary easing programme and how he intends to return the bank’s policy to normal.

In January, the governor was forced to revise down the BoJ’s inflation forecasts, a step seen as further evidence that authorities are unable to boost prices.

The bank wants to achieve stable growth with prices rising two percent a year, but it expects inflation for the fiscal year ending next March of 0.9 percent.

The central bank’s measured downgrade of the Japanese economy comes as economists are increasingly viewing China with caution.

South Korea’s policy lenders will inject about 53 trillion won (US$46.5 billion) in such fields as artificial intelligence, fifth-generation network services and Internet of Things (IoT), the country’s vice finance minister said Friday.

Lee Ho-seung made the comment at the inaugural session of a consultative body at the state-run Korea Development Bank (KDB) in western Seoul.

The body — which is composed of senior officials of the government and policy lenders — is meant to oversee and coordinate policy loans to ensure the efficient provision of loans.

In 2018, the KDB and other policy lenders injected 47 trillion won into the innovative sectors, according to the ministry.

South Korea has been pushing to foster artificial intelligence, fifth-generation network services and Internet of Things (IoT) as well as other innovative sectors as its new growth engines.