Bank of Japan leaves monetary policy unchanged
February 18, 2005
Tokyo - The Bank of Japan's policy board yesterday voted unanimously to leave its ultraeasy monetary policy unchanged after official data showed the world's second-largest economy slipped into recession last year.
"The Bank of Japan will conduct money market operations, aiming for an outstanding balance of current accounts held at the bank of about ´30 trillion to ´35 trillion [R1.7 trillion to R1.99 trillion]," the central bank said after a two-day meeting.
The statement, unchanged from those issued after previous meetings, referred to a "quantitative" credit easing whereby the bank pumps cash into the financial system instead of lowering key short-term rates that are already near zero.
There had been some speculation that the policy board might change the liquidity target to a weekly or even monthly average from the current daily commitment as it had proven difficult to maintain it on a daily basis.
The central bank has repeatedly failed in its day-to-day open market operations to inject the targeted amount as Japanese banks are increasingly unwilling to take the offered amounts.
However, while the major banks have slashed hard-to-recover loans, the economic recovery that began early in 2001 lost steam last year.
Data released on Wednesday showed that Japan's economy contracted mildly for the last three quarters of 2004, slipping into a technical recession as slower exports and consumption hit output.
|
|
