Japan’s central bank decided on Thursday to keep its ultra-loose monetary policy to prop up the recession-hit economy, rocked by the coronavirus pandemic and a consumption tax hike last year.
“Japan’s economy has started to pick up with economic activity resuming gradually, although it has remained in a severe situation due to the impact of the novel coronavirus at home and abroad,” the Bank of Japan said in a statement issued after a two-day monetary policy meeting.
The bank will continue to purchase government bonds without setting an upper limit and exchange-traded funds at an annual pace of about 12 trillion yen (114 billion dollars).
Prime Minister Yoshihide Suga, who took office on Wednesday, vowed to continue his predecessor Shinzo Abe’s economic policy called “Abenomics,” which is based on the “three arrows” of fiscal stimulus, monetary easing, and structural reforms.
However, Abe’s government had failed to produce solid economic growth due to sluggish consumer spending and stagnant wages since he was inaugurated in December 2012.
The bank launched a monetary easing campaign in 2013 to reach a 2-per-cent inflation target within about two years.
The inflation rate, however, has never even come close to the goal.
On Wednesday, the U.S. Federal Reserve maintained its benchmark interest rate range at near-zero, and indicated it will do so until 2023, with the aim of keeping borrowing costs ultra-low until the labour market recovers and inflation picks up.