TOKYO (MNI) – The Bank of Japan on Friday offered a cautious view
in its monthly assessment of overseas economies compared with the
previous month, emphasizing that growth in these economies was still
slowing.

“Overseas economies have shown some, albeit moderate, improvement,
but on the whole still have not emerged from a deceleration phase,” the
latest monthly economic report released on Friday said.

The cautious view on overseas economies is as a result of a
prolonged slowdown in the Chinese economy and continued sluggishness
among the economies in the eurozone.

In comparison, the BOJ’s statement in June said, “Overseas
economies on the whole still have not emerged from a deceleration phase,
but have shown some, albeit moderate, improvement.”

The BOJ maintained its view on the current economic climate and the
prospects for the economy in future, saying, “Japan’s economic activity
has started picking up moderately as domestic demand remains firm mainly
supported by reconstruction-related demand.”

“As for the outlook, Japan’s economy is expected to return to a
moderate recovery path as domestic demand remains firm and overseas
economies emerge from the deceleration phase.”

But the BOJ slightly lowered its assessment of production, saying,
“Production has started picking up moderately with some fluctuations.”

In June, the BOJ merely said, “Production has started picking up
moderately.”

The BOJ left its assessment of other economic components, including
exports and private consumption, saying that they are improving.

The latest report said both exports and production are expected to
increase moderately.

At the two-day policy-setting meeting which ended on Thursday, the
BOJ’s
policy board voted unanimously to maintain practically zero short-term
interest rates and left the scale of its financial asset-buying at Y70
trillion, last raised in April from Y65 trillion.

The BOJ board also left its medium-term projections little changed
from April, forecasting 1.7% economic growth and a modest 0.7% rise in
consumer prices (below its 1% goal) in the next fiscal year.

Faced with undersubscribed market operations, the bank made some
changes to the way it conducts funding operations, which it believes
should help reinforce its monetary easing.

The policy board made only minor changes to its growth and
inflation forecasts for this fiscal year and next, which were last
provided in its semi-annual Outlook Report issued in April.

tokyo@marketnews.com
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