The Bank of Japan (BOJ) held off on further stimulus at its monetary policy meeting on Friday, instead reiterating its pledge to increase base money at an annual rate of 80 trillion yen ($660 billion).
Base money is the cash and deposits held by the central bank, which it expands by buying government bonds and risk assets – an asset purchase program that is bank’s main way of stimulating the sluggish Japanese economy.
The BOJ said that the decision was made in an eight-to-one vote. The central bank will release new long-term economic and price forecasts in its semiannual outlook report due out at 3pm local time. BOJ Governor Haruhiko Kuroda will hold a news conference at 3.30pm to explain the policy decision.
The bank has not expanded its stimulus program since last october, even as falling oil prices and weaker exports, particularly to a slowing China, made it more difficult for Japan to reach the BOJ’s 2 percent inflation target.
Kuroda has argued in the past that the tight job market, which would push up wages, and thus consumer spending, would be sufficient to boost inflation.
The Nikkei was down 0.6 percent at 18,820.92 in early afternoon trade after the monetary policy announcement, compared with the morning close of 18,907.60. The Topix dropped 0.3 percent to 1,542.81 and the JPX-Nikkei Index 400 slipped 0.2 percent to 13,862.40.
The dollar slipped 0.3 percent against the yen to 120.72, dipping to as low 120.29, as traders who had speculated that the BOJ would ease policy pared their bets post-announcement.