The Bank of Japan has assured that it will continue to ease the monetary policy to help the country overcome deflation and return to a sustainable growth path.
Releasing Friday the minutes from the policy board's meeting held on Oct. 4 and 5, the central bank said that it had been providing support to strengthen the foundations for economic growth and pursuing powerful monetary easing. It added that it would continue to conduct monetary policy in an appropriate manner and do its utmost to ensure the stability of Japan's financial system.
While the goal of the BoJ is 1 percent in terms of the year-on-year rate of increase in the consumer price index, Japan continued to remain in deflation in September for the fifth straight month.
The central bank noted that exports and industrial production had been relatively weak as overseas economies had moved somewhat deeper into a deceleration phase. It is expecting that exports and industrial production will remain relatively weak for the time being affected by the prolonged state of economic slowdown in China, the situation of the protracted European debt problem and the U.S. economy recovering only at a moderate pace.
On a positive note, there is the expectation that public investment is on the rise. “Public investment continued to increase, primarily in that related to reconstruction following the earthquake disaster. The amount of public construction completed -- a measure that reflected the progress of public works -- continued to rise in July relative to the April-June quarter, after having increased for four straight quarters through that quarter. The value of public works contracted -- a measure that reflected public works orders – had also increased in the July-August period compared with the April-June quarter after having registered a higher quarter-on-quarter increase in April-June than in January-March,” the minutes said.
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The BoJ added that the representative from the Japanese Cabinet Office remarked that it was likely that movements toward economic recovery would pause for the time being. The minutes also point out that the government has taken note that since there was a risk that a further slowing down of overseas economies would exert downward pressure on the Japanese economy, it was deemed necessary to monitor the situation with greater vigilance.
The central bank stressed that Japan’s cabinet designated overcoming deflation swiftly, realizing the economic revitalization and achieving medium- to long-term economic growth as tasks of high priority.