The Bank of Japan (BoJ) yesterday slashed its annual inflation forecast and once again delayed its timetable for hitting a 2 percent target as the economy struggles to gain traction despite years of stimulus.
Central bankers also decided to maintain the bank’s ultra-loose monetary policy at a time when their counterparts in other major economies from the Americas to Europe consider ending the era of cheap cash.
Investors were relieved over the bank’s decision. Tokyo’s benchmark Nikkei 225 index rose 0.62 percent, or 123.73 points, to end at 20,144.59, while the TOAX of all first-section issues gained 0.69 percent, or 11.14 points, to 1,633.01.
The yen fell against other major currencies, a plus for Japanese exporters.
“Yenselling accelerated following the announcement as the delay in [achieving] the inflation target generally means the BoJ would have to continue its easing in sharp contrast to other major central banks moving to tightening,” said Tomohiro Nishida, a dealer at Sumitomo Mitsui Trust Bank Ltd.
The US dollar climbed to ￥112.12 yesterday afternoon from ￥111.84 in New York on Wednesday.
The central bank said it now expects the core consumer price index to rise 1.1 percent in the year to March, down from its April estimate of 1.4 percent, while its March 2019 prediction was cut to 1.5 percent from 1.7 percent.
In a statement after the policy meeting the bank also said it now expects to achieve the 2 percent objective sometime in the year to March 2020.
Officials had in 2013 set a two-year time line when unveiling the bank’s massive monetary easing program as part of Japanese Prime Minister Shinzo Abe’s push to kick-start growth in the world’s third-largest economy.
“The BoJ has already pushed out the time line several times. Now four years have passed and there is no sign the inflation rate is rising,” Masaaki Kanno, chief economist at Sony Financial Holdings Inc in Tokyo and a former BoJ official, told Bloomberg TV.
However, the bank did lift its economic growth outlook to 1.8 percent for the current fiscal year from its previous estimate of 1.6 percent. It also hiked its fiscal 2018 outlook by 0.1 percentage point to 1.4 percent.
Analysts were skeptical about whether the BoJ would achieve its goals.
“Even after today’s downward adjustments, the bank’s inflation forecasts for the current fiscal year remain too high and there is little chance of hitting the 2 percent target next year either,” Capital Economics Ltd economist Marcel Thieliant, said in a commentary. “The upshot is that we expect the bank to leave policy settings unchanged for the foreseeable future.”
Government and central bank officials have blamed external factors, such as falling energy prices and uncertainty related to emerging economies, for failure to achieve the target.
‘ACCORDING TO PLAN’: A company official said that it has set up production sites worldwide to provide services and that its Wisconsin project was going smoothly Hon Hai Precision Industry Co’s (鴻海精密) smart manufacturing center in Wisconsin would begin trial manufacturing in the middle of this year, the company said yesterday, adding that it plans to build a research institute to develop key technologies to support growth over the next five years. Hon Hai, known internationally as Foxconn Technology Group (富士康科技集團), said in an annual report submitted to the Taiwan Stock Exchange that its planned Foxconn Institute for Research in Science and Technology would conduct research into artificial intelligence, next-generation communications, quantum computing, cybersecurity and nano semiconductors in Taiwan. Hon Hai is to make products at the center
TV and online retailer Momo.com Inc (富邦媒體) yesterday said it has set up a new logistics subsidiary, Fu Sheng Logistics Co (富昇物流), to oversee the company’s extensive shipping operations. Leveraging Momo’s 23 satellite warehouses and distribution centers nationwide, Fu Sheng will be in charge of executing the retailer’s same-day shipment plan for deliveries in Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung, Momo said in a press release. Seeking to further shorten its supply chain, the company is to set up another seven satellite warehouses and distribution centers by the end of the year. “Fu Sheng has a fleet of 200 couriers
E Ink Holdings Inc (元太科技), the world’s sole supplier of e-paper displays for e-readers and shelf labels, posted its best quarterly net profit for the first quarter in nine years amid increased demand during a traditionally slow season. Net profit soared 80 percent to NT$787 million (US$26.23 million) in the quarter ended March 31, compared with NT$438 million a year earlier. That translated into earnings per share of NT$0.69, up from NT$0.39. E Ink posted lower royalty income of NT$371.23 million last quarter from NT$448.74 million a year earlier, a company financial statement showed. E Ink said that it expects royalty income to
The latest US government action against Huawei Technologies Co (華為) takes direct aim the company’s HiSilicon (海思) chip division — a business that in over the past few years has become central to China’s ambitions in semiconductor technology, but is now to lose access to tools that are central to its success. That could make it the most damaging measure by the US yet against a Chinese company. On Wednesday, US officials told reporters that the Huawei’s chip division functioned as a “tool of strategic influence” for the Chinese Communist Party. Huawei, for its part, denounced the US allegations and called the