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Bank of Japan affirms optimism over the health of the Japanese economy

by | 15 Jan, 2018

Nordstrom Kohl's Target Macys

BoJ Governor Haruhiko Kuroda at the World Economic Forum in Davos – 2010

The Yen soared to a 4-month high today after the Governor of the Bank of Japan Haruhiko Kuroda offered an upbeat view on the economy and inflation levels in the country.

Kuroda reiterated the central bank’s resolve to maintain its quantitative easing programme, but offered a rosier view on the future in a speech to BoJ regional bank managers. Kuroda said: “Japan’s financial system remains stable and monetary conditions are very accomodative.” He added, “The economy is expected to continue expanding moderately.” He also noted that inflation was moving towards the banks 2 per cent target.

In the banks latest regional economic report, the BoJ raised its assessment for 3 of Japan’s 9 regional economies and maintained a rosy view for the remaining 6. The bank described 2 regions as having economies which were expanding, the first time it has used an upbeat assessment for as many regions since April 2007.

The report detailed the reasons for its improving economy including an uptick in exports as it read: “These reports were based on the assessments that the virtuous cycle from income to spending had been maintained, as labor market conditions had continued to tighten steadily and private consumption has improved, while exports had been on an increasing trend with overseas economies growing at a moderate pace.”

Despite Kuroda reaffirming the bank would keep using quantitative easing for as long as was necessary to maintain economic stability, speculation is mounting that the BoJ will begin to ease off on its asset purchases sooner than expected, following in the footsteps of other central banks including the European Central Bank and Federal Reserve, which both outlined steps they would be taking to cut back asset purchases in 2017.

What the BoJ is doing looks to be working from an investor perspective. Japanese indices including the TOPIX (seen below) and Nikkei 225 have seen stellar gains over the past 5 years.

Related: China labels Bloomberg report on stopping debt purchases as ‘fake news’

Nordstrom Kohl's Target Macys

The economic strategies of Japanese PM Shinzo Abe have been labelled ‘Abenomics’ and have well supported the domestic equity markets

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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