Japan’s central bank has opted to keep its ultra-loose monetary policy in place, saying the economy is on track for a “moderate recovery,” despite slowing growth in the past quarter.
The Bank of Japan (BOJ) ended a two-day policy meeting without any moves to step up bond purchases aimed at pumping between ￥60 trillion and ￥70 trillion (US$600 billion and US$700 billion) a year into the world’s third-largest economy.
There had been some speculation that easing might be stepped up after economic growth fell by half to 1.9 percent in July-September.
BOJ members said they believed Japan was progressing toward an inflation target of 2 percent, despite weakness in exports.
However, some economists question whether higher prices are doing much to spur investment needed to sustain growth in the long term.
“Regarding risks, there remains a high degree of uncertainty concerning Japan’s economy, including prospects for the European debt problem, developments in the emerging and commodity exporting economies and the pace of recovery in the US,” the central bank said in a statement.
It said the monetary easing would continue “as long as it is necessary.”
A recent comment from a BOJ official suggesting the central bank could step up efforts to spur growth helped reassure investors jittery over the potential impact from an eventual reduction in bond purchases by the US Federal Reserve. Minutes of the Fed’s latest policy meeting, released on Wednesday, suggested support for reducing its bond purchases if the US job market improves.
News that officials at the European Central Bank may consider a similar bond purchasing program to reinvigorate the region’s lackluster economy has also helped.
Japanese shares have surged to their highest levels in six months, with the benchmark Nikkei 225 stock index closing yesterday up 1.9 percent at 15,365.60, its highest close since May 22.
The monetary easing announced after Japanese Prime Minister Shinzo Abe appointed Haruhiko Kuroda as BOJ governor, replacing Masaaki Shirakawa, who was known for his cautious approach, is aimed at vanquishing deflation by doubling Japan’s monetary base through the central bank’s aggressive asset purchases.
The monetary base is duly rising as expected. However, most of the inflationary impact from pumping money into the economy has come from rising costs for imports of fuel and industrial inputs as the yen weakens, said Yukio Noguchi, an adviser to the Institute of Financial Studies at Tokyo’s Waseda University.
The stock of cash in circulation has barely increased, as banks park proceeds from sales of government bonds to the BOJ in accounts at the central bank.
“Companies have no demand for borrowing,” Noguchi said.
Domestic demand is expected to perk up in coming months as consumers step up purchases of big-ticket items such as cars and appliances and buy new homes ahead of the imposition of a 3 percentage point increase in the national sales tax to 8 percent.
Weaker-than-expected growth in emerging economies has slowed exports, which fell 0.6 percent in July-September, though that has been offset to some extent by a recovery in auto shipments to the US.
NO VIRUS BLUES: A SEMI Taiwan official said that the virus does not slow down the global semiconductor industry’s investment in manufacturing equipment The production value of the nation’s semiconductor industry is expected to grow 16.7 percent this year from last year, outpacing the global industry’s 3.3 percent growth, industry association SEMI said yesterday. That would help Taiwan safeguard its second spot in the global semiconductor market with a production value of more than NT$3 trillion (US$102.73 billion), SEMI Taiwan president Terry Tsao (曹世綸) told a media briefing in Taipei for the Semicon Taiwan trade show beginning today. The global semiconductor industry’s production value is expected to increase to US$426 billion this year, SEMI said. In terms of semiconductor equipment investment, equipment billings from Taiwanese firms
Intel Corp has received licenses from US authorities to continue supplying certain products to Huawei Technologies Co (華為), a company spokesman said yesterday. Washington has been pushing governments around to world to squeeze out Huawei, saying that the telecom giant would hand data to Beijing for espionage. From Monday last week, new curbs have barred US companies from supplying or servicing Huawei. This week, the state-backed China Securities Journal reported that Intel had received permission to supply Huawei. China’s Semiconductor Manufacturing International Corp (SMIC, 中芯國際), which uses US-origin equipment to make chips for Huawei and other companies, last week confirmed that it had sought
Swancor Renewable Energy Co (上緯新能源) yesterday announced plans for a 4.4 gigawatt (GW) offshore wind project off Miaoli County as part of its commitment toward Taiwan’s energy transformation, the company said in a statement. The “Formosa 4” project includes three deep-water wind farms 18km to 20km off the coast, Swancor Renewable CEO Lucas Lin (林雍堯) said, adding that planning for the project began last year. A proposal for Formosa 4 was this week submitted to the Environmental Protection Agency (EPA), the company said. Swancor Renewable jointly developed the Formosa 1 project, a 128 megawatt (MW) wind farm about 4km off Miaoli and the
INVEST IN TAIWAN: A metal components casting firm and the world’s largest maker of aluminum bicycle rims also obtained approvals to join the program Solar Applied Materials Technology Co (SOLAR, 光洋應用材料), a part of Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) “green supply chain,” has pledged to invest NT$1 billion (US$34.1 million) to build a new plant at the Tainan Technology Industrial Park (台南科技工業區), the Ministry of Economic Affairs said yesterday. SOLAR has been collaborating with TSMC to extract precious metals from waste and reuse them as “sputtering target” material in high-end semiconductor manufacturing, a TSMC press release issued in May said. Established in 1978, SOLAR also offers key materials and integrated services to customers in the optoelectronics, information and communications technology, petrochemicals and consumer electronics industries,