The Bank of Japan's Policy Board on May 20 decided not to take additional monetary easing measures, a sign the Japanese economy was inching toward recovery in the wake of the Great East Japan Earthquake.
The Bank of Japan's Policy Board on May 20 decided not to take additional monetary easing measures, a sign the Japanese economy was inching toward recovery in the wake of the Great East Japan Earthquake.
"Automakers are expecting to move forward plans to increase production, and it appears that the electricity supply problems this summer will not be as serious as initially forecast," BOJ Governor Masaaki Shirakawa told a news conference following the Policy Board meeting. "Those are very encouraging changes."
The nine members of the Policy Board agreed unanimously to maintain the BOJ's current monetary policy.
The central bank's policy of interest rates close to zero will continue. The BOJ will also continue with a 40-trillion yen ($483 billion) fund from which it can purchase financial assets, such as government and corporate bonds, as a means of pumping funds into the economy.
At the previous board meeting on April 28, Deputy Governor Kiyohiko Nishimura proposed increasing that fund to 45 trillion yen as an additional monetary easing measure.
However, that proposal was retracted at the latest meeting.
Policy Board members likely saw no need for additional monetary easing measures after the latest economic indicators pointed to signs of a recovery.
However, from a long-term perspective, it is still too early to fully estimate the effects of the March quake and tsunami on the economy.
BOJ officials continue to be concerned about a further worsening due to the effects of the disasters and warned of the risks of downward pressures on the economy.
Officials indicated they were prepared to implement appropriate monetary easing measures, depending on future economic trends.
BOJ officials are also concerned about what they can do to help post-disaster rebuilding and reconstruction.
The central government will release a first set of proposals in mid-June by an advisory panel looking into the rebuilding process. The central government is expected to discuss a second supplementary budget over the summer for further rebuilding measures.
Shirakawa said the BOJ "would consider appropriate measures it could take in line with what the central government implements for disaster assistance."