The Bank of Japan rejected a proposal for keeping interest rates virtually at zero until a price target is in sight and refrained from adding to stimulus, ahead of leadership changes next month.
The central bank kept its asset purchase fund unchanged at 76 trillion yen ($813 billion), according to a BOJ statement released in Tokyo today. That was in line with analysts’ forecasts. Policy makers rejected board member Ryuzo Miyao’s call for the pledge on rates.
A report today showing that gross domestic product shrank for a third straight quarter strengthens Prime Minister Shinzo Abe’s case for boosting fiscal and monetary stimulus to counter deflation and revive the world’s third-biggest economy. BOJ Governor Masaaki Shirakawa and two of his deputies are set to step down on March 19, leaving behind a global debate on whether Japan’s government is triggering an excessive depreciation in the yen.
“The BOJ will probably wait until the installment of new leadership,” said Takeshi Minami, chief economist in Tokyo at Norinchukin Research Institute Co. “Whoever takes the position, the BOJ will have to be more aggressive to help the economy as Abe is eying elections.”
Twenty analysts surveyed by Bloomberg News predicted no easing after the bank pledged last month to begin open-ended asset purchases in January 2014 and set a 2 percent inflation target. The central bank kept its key interest rate unchanged between zero and 0.1 percent and monthly purchases of government bonds at 1.8 trillion yen, today’s statement showed.