THE Bank of Japan says its massive money-printing programme is starting to bear fruit and the country’s long stagnant economy is recovering.
In their most optimistic view in more than two years, policymakers said the world’s third-largest economy was “starting to recover moderately” and voted to keep increasing the money base at between ¥60 trillion (£400 billion) and ¥70tn a year.
Bank governor Haruhiko Kuroda said that, while overseas economies were weaker than expected, that would be offset by robust domestic consumer spending and a pick-up in capital expenditure, and so he remained confident of meeting a target of lifting inflation to 2 per cent in roughly two years.
He said: “Chinese policymakers have clearly shifted to a stance of emphasising the quality of economic growth rather than speed. Still, there’s no change to our forecast that China’s economy will continue to achieve strong, stable growth.”
As well as stimulating activity domestically, the Japanese money-printing programme has weakened the yen and made the country’s exports more attractive, leading to accusations of deliberate currency devaluation.
The BoJ decision came in the wake of minutes from the US Federal Reserve’s last policy meeting. They showed that about half its central bankers initially wanted to close its stimulus programme by the end of the year, but were persuaded to wait a little longer in order to ensure the US recovery was on track.
In particular, policymakers want to ensure enough jobs are being created and were apparently unconvinced of the strength of the labour market despite robust figures recently.
Fed chairman Ben Bernanke said that a “highly accommodative policy is needed for the foreseeable future”, boosting world stock markets hungry for more stimulus.