A majority of policymakers under the Bank of Japan disclosed the narrow growth of the Japanese economy and the drop of prices as the overseas economies couldn’t find stability. After the Bank of Japan’s April minutes, the yen and Japanese stocks held gains while finance Minister Taro Aso clarified his stand on the financial market.
Earlier today, the minutes of the bank's April policy was released and the slow pace of growth of the overseas economies and the financial sectors were highlighted.
The report acknowledged the moderate recovery of the Japanese economy amid the downbeat export data. The bank expected the exports to be flat for the time being. But if the emerging economies find recovery, it may increase moderately.
Meanwhile, the public investment was expected to gradually level off from its current downside while the business fixed investment was projected to remain on the up trend behind higher corporate profits and highly positive financial conditions.
The minutes indicated that the monetary base had increased significantly as asset purchases by the Bank progressed and the year-on-year rate of growth was in the range of 25-30 percent.
Firms' funding costs had been hovering at extremely low levels. With regard to credit supply, financial institutions' lending attitudes -- as perceived by firms -- had been improving further and were significantly accommodative.
Firms' credit demand had been increasing moderately, mainly for working capital and funds related to mergers and acquisitions. Against this backdrop, the year-on-year rate of increase in the amount outstanding of bank lending had been around 2 percent. Firms' financial positions had been favorable,
Although most of the members agreed that the development of the global financial markets affects Japan’s economic activity and prices, one member expressed that Japan’s financial markets had not yet overcome the turbulence as overseas financial markets had started to regain their stability.
Further, the private consumption and the services consumption were seen as steady despite employment improvement.
Private consumption had been resilient against the background of steady improvement in the employment and income situation, although relatively weak developments had been seen in some indicators.
On the other hand, services consumption such as dining-out and travel had been increasing firmly recently. Private consumption was expected to remain resilient with the employment and income situation continuing to improve steadily, albeit with relatively weak developments remaining in some indicators, the report disclosed.
In other news, Finance Minister Taro Aso expressed no intention to conduct currency interventions and reiterated that they would respond in line with their agreement at the G7 and G20 that rapid fluctuations are undesirable and stability.
The yen remained moderately higher and Japanese officials remained worried as Brexit approached. At the moment, the minister remains mum on Japan's stand if Britain leaves the European Union.
On the other hand, Japanese stocks edged higher at the close of the trade headed by strong performance in the transportation equipment, pharmaceutical industry and food sectors. The Nikkei 225 advanced while the Nikkei Volatility posted losses.