The Bank of Japan kept its interest rate unchanged at 0-0.10% and made no changes to its 55 trillion yen quantitative easing program. The Bank said: “The pick-up in Japan’s economic activity has paused, mainly due to the effects of a slowdown in overseas economies and of the appreciation of the yen. As for domestic demand, business fixed investment has been on a moderate increasing trend and private consumption has remained firm. On the other hand, exports and production have remained more or less flat, due in part to the effects of the slowdown in overseas economies and of the yen’s appreciation as well as of the flooding in Thailand. Improvement in business sentiment has slowed on the whole despite steady improvement in domestic demand-oriented sectors.”
The Bank has previously forecast real GDP growth of 0.2-0.6% in fiscal 2011, and 2.5-3.0% in fiscal 2012. Meanwhile, nominal GDP growth in Japan was recorded at -0.5% in June and -0.9% in March, placing it at -1% in both quarters on an annual basis. The Japanese Yen (JPY) has gained around 5% against the US dollar so far this year; the USDJPY exchange rate last traded around 77.75
