BOJ keeps policy unchanged

Recession doesn't move central bank

The Bank of Japan left its monetary stimulus unchanged on Thursday, indicating that the second recession since Prime Minister Shinzo Abe took office isn't enough to alter Governor Haruhiko Kuroda's view that the inflationary trend is improving.

The BOJ's decision to keep already unprecedented stimulus unchanged was forecast by all 41 economists in a Bloomberg survey and comes days after a report showing Japan fell back into a recession in the six months through September. Prices fell in August and September.

Kuroda has said that the inflation trend is improving while noting that he remains ready to adjust policy if needed. Economists are divided into two camps -- one expecting further easing early next year and another projecting no further action for the foreseeable future.

"The BOJ is already doing massive easing, and I don't think they want to do more because the additional impact will be limited," said Maiko Noguchi, an economist at Daiwa Securities Group Inc and a former official at the central bank.

Twenty-one of 41 economists surveyed forecast the bank will add stimulus by April 2016 while 19 don't expect additional stimulus, according to the poll conducted from November 13-17. One foresees further stimulus in November 2016.

Monetary base
The BOJ kept its pledge unchanged to increase the monetary base at an annual pace of 80 trillion yen ($648 billion), according to a statement released Thursday.

The central bank said that "inflation expectations appear to be rising on the whole from a somewhat longer-term perspective," though it added that "some indicators have shown relatively weak developments."

In a briefing in Tokyo after the meeting's results were announced, Kuroda said Japanese companies haven't carried through on capital expenditures quite as much as their plans indicated.