The Bank of Japan (BOJ) yesterday left its monetary stimulus untouched, while painting a gloomier picture of the economy this year as it signaled it does not see a quick recovery from the COVID-19 pandemic.
The BOJ kept its short-term interest rate at minus-0.1 percent, its 10-year yield target at about zero and left its asset purchases unchanged, in line with 96 percent of economists surveyed before the decision, who predicted that the central bank would not add to its stimulus at the meeting.
The bank released updated price and growth projections with median forecasts, having skipped pinpoint figures in April.
Photo: Bloomberg
The latest predictions point to a deeper slump this year, but suggest a slightly faster pickup in the following years.
Earlier this month, people familiar with the matter said that the bank’s board does not see a need to act further at this point, as financial markets are relatively calm and businesses are not facing severe funding problems.
Data have signaled that the recession likely bottomed out in the second quarter.
Even though Japan has faced a far less deadly COVID-19 outbreak than Europe and the US, a rise in Tokyo cases this month has continued to weigh on sentiment and inflation has fallen below zero.
The nation’s manufacturers are also heavily reliant on demand from markets where the pandemic is escalating.
The board said that it sees the economy shrinking 4.7 percent in the 12 months through March next year. In April, it saw a contraction of somewhere between 3 percent and 5 percent.
The return of a median projection suggests that the BOJ is now less uncertain about the path ahead.
On inflation, the bank forecast prices falling 0.5 percent this fiscal year, near the middle of the range given last quarter.
The BOJ said that it still sees price growth returning next fiscal year, but does not see inflation rising anywhere near its 2 percent target for the foreseeable future — another signal that BOJ Governor Haruhiko Kuroda and his colleagues are unlikely to raise interest rates before the governor’s term ends in April 2023.
“Barring a second wave of virus infections or substantial shock to financial markets, we expect the BOJ to stay on hold for the time being,” Bloomberg senior economist Yuki Masujima said.
The bank has now refrained from further policy action at two regular meetings, following a flurry of action during the early days of the pandemic, when it expanded purchases of corporate bonds and stock funds, pledged to buy as much government debt as needed to keep yields low, and introduced two lending programs for struggling companies.
More than 90 percent of economists surveyed by Bloomberg this month said that the BOJ has done enough, or more than enough, so far to support the economy, and 63 percent see the bank standing pat through this year, up from 38 percent last month.
The BOJ, along with the US Federal Reserve and European Central Bank, has emphasized its readiness to do more, and reiterated that the immediate focus is on securing financing for firms and market stability.
The BOJ last month estimated the size of its two special funding programs for struggling companies at ¥90 trillion (US$841 billion). The outstanding amount of loans under the programs was ¥22.6 trillion, it said last week.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has appointed Rose Castanares, executive vice president of TSMC Arizona, as president of the subsidiary, which is responsible for carrying out massive investments by the Taiwanese tech giant in the US state, the company said in a statement yesterday. Castanares will succeed Brian Harrison as president of the Arizona subsidiary on Oct. 1 after the incumbent president steps down from the position with a transfer to the Arizona CEO office to serve as an advisor to TSMC Arizona’s chairman, the statement said. According to TSMC, Harrison is scheduled to retire on Dec. 31. Castanares joined TSMC in
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
FACTORY SHIFT: While Taiwan produces most of the world’s AI servers, firms are under pressure to move manufacturing amid geopolitical tensions Lenovo Group Ltd (聯想) started building artificial intelligence (AI) servers in India’s south, the latest boon for the rapidly growing country’s push to become a high-tech powerhouse. The company yesterday said it has started making the large, powerful computers in Pondicherry, southeastern India, moving beyond products such as laptops and smartphones. The Chinese company would also build out its facilities in the Bangalore region, including a research lab with a focus on AI. Lenovo’s plans mark another win for Indian Prime Minister Narendra Modi, who tries to attract more technology investment into the country. While India’s tense relationship with China has suffered setbacks