By TraderVox.com
The Bank of Japan Governor Masaaki Shirakawa together with his board is expected to uphold the overnight lending rate between zero percent and 0.1 percent on Valentine’s Day. According to some analysts, the 55 trillion yen asset-purchase proposed will remain unchanged. Yesterday BOK promised additional stimulus in the England’s economy and Fed in the US promised to keep the interest rates at their lowest. Indications are there that in Tokyo; officials may focus of positive signs from the financial market and the low unemployment rate as indicators of growth in global economy. This is despite the strong yen crippling exports which analysts say might have caused the economy to shrink last year.
However, analysts are cautious about the sovereign problems in Europe and they are advising that the policy makers should leave an allowance of additional accommodative policies for April. It is estimated that the GDP declined by 1.4% over the last quarter after expanding by 5.6 percent over the previous three months.
The country’s economy had experienced some difficulties due to the recent weakness in exports due to a strong yen, the floods that hit Thailand which disrupted production significantly, and the reduced business and consumer confidence which was caused by the Europe’s debt crisis. Following the March earthquake, the government approved four supplementary budgets to strengthen demand and rebuild the country. The budgets were worth 20 trillion yen.
Japan officials are grappling with measures to take to ensure that their currency remains weak against the currencies of its major trading partners. Yesterday, the Japan’s Topix Index rose to its highest level since August and the currency remained 2.4 percent (77.21) weaker than the postwar level of 75.35 yen. The strong Euro has caused enormous losses to Panasonic Corp and Sharp Corp. necessitating the monetary easing that had been conducted.
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