The Bank of Japan (BOJ) kept monetary policy on hold and upgraded its assessment of the economy, citing increasing signs of recovery from the devastating March earthquake.
At its policy meeting on July 12 the BOJ kept its benchmark interest rate steady at a range of zero to 0.1 percent and held off on loosening policy further.
The central bank added in its statement that: “Japan’s economy is picking up, as supply constraints from the earthquake ease.”
But the BOJ also included new risks to Japan’s economic outlook, like U.S. balance sheet adjustments and Europe’s debt woes.
Factory output jumped by the most in almost 60 years in May, while business and consumer sentiment showed signs of recovery from the quake’s damage.
The data underscore expectations held by both the central bank and economists that the Japanese economy would grow in the third quarter, after three consecutive quarters of contractions.
The BOJ has stood pat on policy since easing credit just days after the March disaster, when it topped up a pool of funds to buy assets, ranging from government bonds to corporate debt.
Bottom line: The Bank of Japan holds monetary policy, but revises up its assessment of the country’s economy, encouraged by a rebound in factory output and increasing signs that the recovery from the devastating March earthquake is broadening.