BoJ maintains monetary policy
THE Bank of Japan (BoJ) yesterday held off fresh monetary easing measures, but its chief said he was ready to act if the economy took a hit from a sales tax hike or United States debt default.
After a two-day policy meeting, BoJ officials issued an upbeat statement that said the economy was still "recovering moderately" while overseas economies were "heading towards a pick-up".
The bank had been widely expected to hold fire as it studies how its unprecedented monetary easing plan, which pumps huge amounts of money into the financial system, was rippling through the world's No. 3 economy.
But bank governor Haruhiko Kuroda said he was ready to pull the trigger on fresh policy moves if the economy heads south.
"We will review both upside and downside risks," Kuroda said here.
"If something happens, naturally we will take whatever monetary policy actions are necessary."
The meeting came just days after the BoJ published its Tankan survey, which showed business confidence in Japan had soared to a more than five-year high in the past three months - good news for Prime Shinzo Abe's bid to revitalise the economy.
The closely watched indicator was seen as key to Abe's decision this week to press on with a plan to hike sales taxes to eight per cent, from five per cent in April.
The rise is viewed as crucial for Japan to shrink what is the rich world's heaviest public debt burden.
Meanwhile, in Washington, International Monetary Fund chief Christine Lagarde praised Japan's planned sales tax hike as an initial step towards reducing the country's crushing debt burden and called for further efforts.
Lagarde said Japan needed "a credible plan" to reduce its national debt, which is nearing 250 per cent of gross domestic product.
"Entitlement reform is the next one. Without these policy fundamentals, any gains made so far could easily melt away," she added. AFP