Bank of Japan likely to stick to growth scenario in outlook review - report |
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Sun, 14 Jan 2007 10:16
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TOKYO (XFN-ASIA) - The Bank of Japan will probably maintain its assessment that there is a 'long-lasting economic expansion' during an interim review next week of its economic and price outlook report, the Nihon Keizai Shimbun reported.In a report carried on its website at the weekend, the Nikkei, without identifying any sources, said that although the central bank was expected to admit that the growth in personal consumption and prices has been slower than expected since last summer here, it would likely adhere to its overall scenario of economic expansion -- the basic prerequisite for an interest rate increase.In light of this, the Bank of Japan will start coordinating views among its policy board members on Monday about the possiblility of a increase in interest rates.In its 'Outlook for Economic Activity and Prices' issued in October, the bank said it expected the economy to continue its lengthy expansion, and said that it would gradually raise interest rates if actual trends moved in line with the report.The Bank of Japan issues a report every April and October, stating its expectations for economic and price trends one or two years in the future, and conducts an interim review of the document at a policy board meeting three months after it is released. The interim review of the October outlook report is slated to come during the two-day policy board meeting scheduled to start Wednesday.At the last policy-setting meeting, last month, the bank left interest rates unchanged, with its governor, Toshihiko Fukui, saying: 'Recently, consumer spending and prices have been weak.'The October report said the median rate of real economic growth projected by the Bank of Japan's policy board for the year ending March would be 2.4 pct, and that the core consumer price index would rise by 0.3 pct.But the Nikkei said it was now believed that these forecasts will be hard to meet.So the Bank of Japan will acknowledge weak growth in consumption and prices at its interim review of the outlook report at its forthcoming policy board meeting. Even so, board members will probably reconfirm an scenario in which rising wages will help to push up steadily consumer spending, and say that the weak trends in consumption and prices will not prevent the central bank from raising interest rates.
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Bank of Japan governor reiterates that economy expanding moderately 