Japan's Central Bank Decides To Keep Their Non-Standard Financial Policies

Daily Forex Fundamentals | Written by ecPulse.com | Oct 14 09 07:18 GMT |

Japan's central bank decided today to maintain its interest rates unchanged at 0.10% the tenth consecutive meeting, indicating however that it feels optimistic about the economy, which started recovering. Yet it did not mention ending their non-standard financial policies. Today's decision was unanimous, but Japan's central bank governor Mr. Shirakawa indicated that the need for the non-standard financial policies is less than before, as Japanese companies have become capable to obtain any necessary funding without government support. After these remarks it was widely expected for the central bank to announce ending their non-standard financial policies represented by buying bad debt and pumping funds into companies, which was started since last December when the intrest rates was lowered to its current level 0.10%. But since it did not mention ending their non-standard financial policies yet, its obvious that the central bank needs more time to make sure of the ability of small firms to obtain the necessary funding before the elimination of those financial policies, which had the biggest impact on the economy which was dragged out of recession. The central bank said in a statement accompanying the rate decision today that public investment had improved during the last period and that productivity and exports witnessed an increase as a result to the improving global demand especially from the Chinese economy, which replaced the U.S. economy by becoming the most important trade partner with Japan. As for the annual consumer price index, the central bank indicated that there are increases deflationary risks, as a result to the falling energy and food prices compared with last year's levels. As for the expectations on the medium to long term until 2010 the bank indicated that the decline in consumer price will become moderate especially with the stability foreseen in crude oil prices compared with last year The central bank also seen a better performance by the emerging economies that previously expected. Yet the downside risks for the Japanese economy continue to exist because of the fluctuations in the global financial markets and economic conditions, as well as the change in the companies' growth expectations over the medium to long term. Therefore the central bank will focus next on the downside risks faced by the economy and increase its efforts to stabilize prices. Meanwhile Japan released also its consumer confidence index during the month of September, which rose to 40.7 compared to the previous reading of 40.4. as for the households confidence also during the month of September it rose to its highest level in the 23 months to 40.5 compared to the previous reading of 40.1. all this was a result to the government stimulus plans and the improvement in companies profits which might lessen layoffs, thereby stabilize the income. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk