Japan's central bank upgrades economic assessment, maintains monetary policy

15:17, February 15, 2011      

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The Bank of Japan (BOJ) on Tuesday kept its monetary policy unchanged and maintained the size of its asset purchasing program, but raised its assessment of the broader economy for the first time in nine months.

The central bank's nine-member policy board voted unanimously at the end of a two-day meeting to keep the overnight call rate target at zero to 0.1 percent.

The bank has maintained its razor thin interest rate to within this range since October in an effort to bolster the nation's economic recovery.

Japan's economy was eclipsed by China as the world's second- largest economy on Monday following the release of the government' s preliminary GDP data, which showed the Japanese economy had contracted in the three months through December, marking the first decline in five quarters.

However, based on recovering exports the BOJ lifted its assessment of Japan's economy, saying: "Japan's economy is gradually emerging from the current deceleration phase".

"Japan's exports and production are showing signs of resuming an uptrend," the BOJ said in a statement, hinting that the January- March quarter may see Japan's economic situation improving from the bank's previous assessment, which stated the economic recovery in Japan "seems to be pausing."

The BOJ policy board opted to maintain the size of its asset purchasing program at 5 trillion yen (60 billion U.S. dollars), which allows the central bank to purchase a range of assets and channel the funds back into Japan's financial system.

As for the future downside risks to Japan's economy, the BOJ said that the pace of economic growth in emerging economies could lead to a spike in commodity prices.

And there still remained some caution about the outlook for the U.S. and European economies, it said.

Source: Xinhua

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