TOKYO (MNI) – The Bank of Japan said in its monthly economic report
for June on Wednesday that industrial production in the July-September
quarter is expected to show a clear gain from April-June as supply-side
constraints are easing.
On Tuesday, the BOJ provided a slightly brighter outlook for output
after a two-day policy board meeting, saying that “production is likely
to regain traction with further easing of supply-side constrains.”
Output is estimated by the government to fall 2.2% in April-June,
posting the fourth straight quarterly decline after slumping 2.0% in
January-March from the previous quarter.
Government data showed that Japan’s industrial output rebounded by
1.6% in April from the worst-ever drop of -15.5% in the wake of the
March 11 earthquake, as manufacturers are scrambling to fix ravaged
production facilities and supply chain networks.
The trade ministry’s latest survey of firms’ forecasts showed that
production is expected to rise 8.0% month on month in May and will
increase further by 7.7% in June.
As for inflation, the BOJ said, “The rate of increase in domestic
corporate goods prices is expected to slow for the time being,
reflecting movements in international commodity prices.”
On Tuesday, the BOJ’s policy board voted unanimously to continue
the bank’s very stimulative, practically zero interest rate policy by
maintaining the target for the overnight call loan rate among commercial
banks at zero to 0.1%.
The bank upgraded its overall economic assessment, citing better
household and business sentiment in the aftermath of the March 11
earthquake disaster, saying, “Japan’s economy continues to face downward
pressure, mainly on the production side, due to the effect of the
earthquake disaster, but is showing some signs of picking up.”
tokyo@marketnews.com
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