Asian Update: BoJ Expects A Gradual Return To Growth
Bank of Japan kept its overnight lending rate steady at 0.5% at its policy meeting Tuesday, as had been widely expected. In a slight downgrade of its assessment of the economy, the BoJ policy statement said “economic growth has been sluggish against the backdrop of high energy and materials prices and weaker growth in exports.” At the same time, it maintained that “while growth will likely remain sluggish for the time being, it is expected to return gradually to a moderate growth path as commodity prices level out and overseas economies move out of their deceleration phase.” The balanced statement said it would conduct monetary policy flexibly, examining risks in both directions, consistent with general expectations for the BoJ to remain on hold indefinitely. It comes as Japan last week reported Q2 GDP contracted by 0.6%, putting the economy on brink of recession.