BOJ keeps policy steady even as Japan slides into recession

A man walks past the Bank of Japan (BOJ) building in Tokyo, Oct 30, 2015.
A man walks past the Bank of Japan (BOJ) building in Tokyo, Oct 30, 2015.PHOTO: REUTERS

TOKYO (REUTERS) - The Bank of Japan maintained its current pace of monetary stimulus on Thursday (Nov 19), clinging to hopes that an economic recovery is in sight despite soft domestic capital expenditure and challenging global business conditions.

The central bank also kept intact its assessment that while exports and output were feeling the pain from weak emerging market demand, Japan's economy continued to recover moderately.

As widely expected, the BOJ reiterated its pledge to increase base money, or cash and deposits at the central bank, at an annual pace of 80 trillion yen (S$920 billion) through purchases of government bonds and risky assets.

"Japan's economy is expected to continue recovering moderately" with capital expenditure remaining on a moderate rising trend, the central bank said in a statement announcing the policy decision, which was made by a 8-1 vote.

The decision came in the wake of Thursday's data showing exports in October fell for the first time in more than a year, stoking worries the world's third-largest economy may struggle to recover from a recession.

BOJ Governor Haruhiko Kuroda will hold a news conference at 2.30pm, Singapore time, to explain the policy decision.

The BOJ has kept monetary policy steady since expanding stimulus in October last year, even as slumping oil prices and weak exports push inflation further away from its target.