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Bank of Japan likely to maintain monetary policy

Bank of JapanThe Bank of Japan is expected to maintain its monetary policy and discuss how weak exports and uncertainty over the Federal Reserve’s stimulus program could affect the country’s economic recovery.

Japan’s exports have weakened, and the outlook for international economies remains uncertain, which could lead the Bank of Japan to be more cautious in its outlook for economic recovery, The Economic Times reports.

Some members of the central bank’s board warned that Japan may not see two percent inflation in the two-year timeframe established by the central bank—the result of economic difficulties overseas and challenges in addressing 15 years of deflation.

“We won’t see another slump in the economy at least for the rest of the current fiscal year [ending in March] as consumers spend more ahead of the tax hike,” Koichi Haji, the chief economist at NLI Research Institute in Tokyo, said, according to The Economic Times. “But exports aren’t picking up as fast as expected despite the boost from a weak yen. The BOJ may decide to ease again after next year’s tax hike, if the downturn in household spending proves bigger than expected.”

Economic growth in Japan exceeded that of other G7 nations during the first half of the year, due in part to Prime Minister Shinzo Abe’s stimulus policies that increased household spending and weakened the yen, thereby benefiting exports.

Despite a slowdown in growth from July to September, many analysts expect an uptick in the fourth quarter as consumers spend ahead of the tax hike in April, The Economic Timesreports.

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