BOJ maintains upbeat view for regional areas of Japan

The Bank of Japan maintained its upbeat assessment for all nine of the country’s regional economies despite looming external risks such as China’s slowdown, suggesting that it saw no immediate need to expand monetary stimulus further.

In a quarterly report on regional economies, the central bank said many areas saw capital expenditure increase gradually and private consumption remain firm on improving job conditions.

“All regions saw their economies recover or recover gradually,” the BOJ said in the report issued on Monday.

But four regions, including western and central areas home to big Japanese auto and electronics goods exporters, offered a gloomier view on output than three months ago, reflecting soft emerging market demand.

Japan’s economy contracted in April-June and some analysts expect it to have shrunk again in July-September as China’s slowdown and rising grocery costs hurt exports and consumption.

The government cut its assessment of the economy last week, warning that some parts of the recovery have dwindled due to weak overseas demand.

Such weak signs in the economy have kept alive market expectations that the BOJ may expand its already massive stimulus program at its rate review next week.

BOJ Governor Haruhiko Kuroda sounded unfazed, maintained his optimism on the prospects for achieving his ambitious 2 percent inflation target.

“Japan’s economy is expected to continue recovering moderately,” he told a quarterly meeting of the BOJ’s regional branch managers on Monday, signaling that the economy can weather the pain from soft external demand without additional monetary easing.

Source : Reuters