Bank of Japan cuts economic growth, inflation view

AFP, TOKYO: Japan’s central bank yesterday cut its economic growth and inflation forecasts, as analysts warned over a disappointing second quarter that underscores the wobbly success of Tokyo’s Abenomics growth project.
Bank of Japan (BoJ) chief Haruhiko Kuroda, however, insisted that any downturn would be short-lived and that policymakers still expect to hit their inflation target by next year, a cornerstone of efforts to bolster the world’s number three economy.
After a two-day policy meeting, the BoJ said the economy would expand 1.7 per cent in the fiscal year to March 2016 while inflation would come in at 0.7 per cent.  That was down from 2.0 per cent and 0.8 per cent, respectively, estimated earlier this year.
While the bank kept up its view that Japan’s economy was recovering “moderately”, it acknowledged that a pick-up in exports and industrial production had seen “some fluctuations”.
Hideo Kumano, senior economist at Dai-ichi Life Research Institute, said trimming the growth forecasts “probably means growth in the April-June quarter was not very good”. Official second-quarter GDP data are due next month.
BoJ policymakers have been scaling back their expectations and governor Haruhiko Kuroda has conceded that an ambitious 2.0 per cent inflation target was still some way off.
But he told reporters after the meeting yesterday that the BoJ was still on track to hit the price target by next year, and that the weakness in exports was due to a still-recovering US economy. Growth would turn around by the third quarter, Kuroda said. “Prices will likely pick up at a
significant pace some time during the end of this fiscal year” to March 2016, he said. Japan’s economy expanded 1.0 per cent in January-March after limping out of recession in the last three months of 2014, and business confidence remains strong.
But consumer spending has struggled after a sales tax rise last year and economists widely expect the BoJ to ramp up its easing programme, likely later this year, to bring Japan closer to its inflation target.

 

Bank of Japan cuts economic growth, inflation view

AFP, TOKYO: Japans central bank yesterday cut its economic growth and inflation forecasts, as analysts warned over a disappointing second quarter that underscores the wobbly success of Tokyos Abenomics growth project. Bank of Japan (BoJ) chief Haruhiko Kuroda, however, insisted that any downturn would be short-lived and that policymakers still expect to hit their inflation target by next year, a cornerstone of efforts to bolster the worlds number three economy. After a two-day policy meeting, the BoJ said the economy would expand 1.7 per cent in the fiscal year to March 2016 while inflation would come in at 0.7 per cent. That was down from 2.0 per cent and 0.8 per cent, respectively, estimated earlier this year. While the bank kept up its view that Japans economy was recovering moderately, it acknowledged that a pick-up in exports and industrial production had seen some fluctuations. Hideo Kumano, senior economist at Dai-ichi Life Research Institute, said trimming the growth forecasts probably means growth in the April-June quarter was not very good. Official second-quarter GDP data are due next month. BoJ policymakers have been scaling back their expectations and governor Haruhiko Kuroda has conceded that an ambitious 2.0 per cent inflation target was still some way off. But he told reporters after the meeting yesterday that the BoJ was still on track to hit the price target by next year, and that the weakness in exports was due to a still-recovering US economy. Growth would turn around by the third quarter, Kuroda said. Prices will likely pick up at a significant pace some time during the end of this fiscal year to March 2016, he said. Japans economy expanded 1.0 per cent in January-March after limping out of recession in the last three months of 2014, and business confidence remains strong. But consumer spending has struggled after a sales tax rise last year and economists widely expect the BoJ to ramp up its easing programme, likely later this year, to bring Japan closer to its inflation target.