September 15, 2015 / 8:57 AM / 3 years ago

UPDATE 3-BOJ stands pat, Kuroda says Japan can weather hit from China slowdown

* BOJ maintains massive stimulus programme
    * Cuts assessment on exports, output
    * BOJ offers bleaker view on overseas economies
    * Some analysts say BOJ could ease again in Oct

 (Adds more Kuroda quotes, details)
    By Leika Kihara
    TOKYO, Sept 15 (Reuters) - Bank of Japan Governor Haruhiko
Kuroda voiced confidence on Tuesday that the economy can weather
the hit from China's slowdown and weak demand in the rest of
Asia, suggesting that he sees no immediate need to expand
stimulus further.
    But he reiterated the central bank "will not hesitate" to
deploy more support if Japan's recovery and the BOJ's 2 percent
inflation target are threatened.
    "It's true exports and output are being affected by the
slowdown in emerging economies. But there's no change to our
view that Japan's economy continues to recover moderately,"
Kuroda told reporters on Tuesday after a policy meeting.
    "There's absolutely no change to our view that we won't
hesitate to adjust monetary policy if there's a change in the
price trend and we think (further action) is needed to swiftly
achieve our price target."
    Kuroda was also sanguine on the outlook for China, saying
that Beijing had the room and resolve to stabilise its slowing
economy with monetary and fiscal measures.
    As widely expected, the BOJ maintained its pledge to
increase base money at an annual pace of 80 trillion yen ($665
billion), preserving its limited policy options in case an
expected U.S. rate hike sparks more global volatility.
    Fears of a China-led slowdown prompted heavy selling in
global markets earlier this month by investors already worried
about whether the recovering U.S. economy can withstand an
interest rate hike, which could come as early as this week.
            
    CUTS VIEW ON EXPORTS        
    A run of poor data, including weak exports, feeble wage
growth and soft household spending, has ramped up pressure on
the BOJ to expand its already massive stimulus programme to
reflate the economy, which shrank in the second quarter.
    The BOJ cut its assessment on exports and output to say they
were "more or less flat." It also offered a bleaker view on
overseas economies, warning that emerging markets were slowing.
    Kuroda said growth likely will rebound in July-September,
though some analysts see a chance of another contraction that
would put the country into its second recession in as many
years.
    Most market players expect the BOJ's next move to be further
easing, but are divided on the timing.
    Some expect it to stand pat until next year, while others
are betting on action at its meeting on Oct. 30 - when the board
reviews its long-term economic and price forecasts. A few think
the BOJ may aim to surprise markets by acting at the next
meeting on Oct. 6-7.
    "We're not in a recession, but the economy clearly lacks
strength and prices are undershooting the BOJ's price target by
a lot," said Hiroshi Miyazaki, senior economist, Mitsubishi UFJ
Morgan Stanley Securities. 
    "The BOJ could ease again in early October, to avoid falling
behind the curve," he said.
    The BOJ is aiming to accelerate inflation to 2 percent by
around next September, hoping that an improving economy will
prompt companies to raise wages and prices. But many analysts
doubt prices will pick up so quickly, with inflation having
ground to a halt due to soft consumption and weaker oil prices.
    A shift in the BOJ board's composition means if Kuroda were
to pull the trigger, he could count on more votes than last
October, when his unexpected proposal to expand stimulus won by
a razor-thin margin. 
    But many BOJ policymakers are wary of acting now, concerned 
about the risk of diminishing returns if they expand the huge
asset buying programme, which is already drying up bond market
liquidity.
 ($1 = 120.3000 yen)


    
 (Additional reporting by Stanley White, Tetsushi Kajimoto and
Kaori Kaneko; Editing by Eric Meijer & Kim Coghill)
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below