BoJ sets rate remain at 0 to 0.1%

JAKARTA: The Bank of Japan decided the uncollateralized overnight call rate to remain at around 0% to 0.1% as Japan's economy which still signals a moderate recovery.The central bank in the press release at the website considers the recovery seems to be pausing.The bank's baseline scenario projects that Japan's economy is likely to grow at a slower pace for some time, but is expected to return to a moderate recovery path thereafter as the growth rate of the global economy is likely to start increasing again led by emerging and commodity-exporting economies.Japans exports have been more or less flat. Corporate profits also have continued to grow, albeit at a slower pace.In this situation, business fixed investment has started to pick up. Meanwhile, the employment and income situation has remained severe, but the degree of severity has eased somewhat.As for private consumption, demand for some goods has suffered a reverse after the sharp increase seen previously. Reflecting these developments in demand both at home and abroad, production has recently declined slightly and business sentiment has also been somewhat weak, particularly in the manufacturing sector.Furthermore, financial conditions have shown further signs of easing, as seen in the declining trend in firms' funding costs and the improvement inlending attitudes of financial institutions.In the area of economic activity, there are some upside risks such as faster growth in emerging and commodity-exporting economies. However, amid continued heightened uncertainty about the outlook for the U.S. and European economies, attention should also be paid to downside risks to Japan's economy.Regarding the price outlook, there is a possibility that inflation in Japan will rise more than expected due to an increase in commodity prices brought about by high growth rates in emerging and commodity-exporting economies, while there is also a risk that the rate of inflation will deviate downward from the bank's baseline scenario due, for example, to a decline in medium- to long-term inflation expectations.The bank has started its asset purchases in all the asset categories in the Asset Purchase Program.The bank will steadily purchase various financial assets and provide longer-term funds through the 35 trillion yen, so that the effects of comprehensive monetary easing spread.In order for Japan's economy to overcome deflation and return to a sustainable growth path with price stability, the Bank will continue to consistently make contributions as the central bank through the three-pronged approach of pursuing powerful monetary easing consisting of comprehensive monetary easing, ensuring financial market stability, and providing support to strengthen the foundations for economic growth.The bank will continue to carefully examine the outlook for economic activity and prices, and take policy actions in an appropriate manner. (T03/NOM)