Japan Industrial Output Falls, Unemployment Steady
TOKYO (AP) â¿¿ Japan's central bank expanded a government bond-buying program Tuesday, vowing to spur growth as it further downgraded the country's economic outlook following declines in industrial output and household spending in September.
Under heavy pressure to do more to help rid the economy of debilitating deflation, the Bank of Japan's policy board voted unanimously to increase the asset purchasing program by 11 trillion yen ($139 billion) to 91 trillion yen ($1.15 trillion).
"The critical challenge for Japan's economy is to overcome deflation as early as possible and to return to a sustainable growth path with price stability," the government and central bank said in a joint statement.Both sides pledged their "utmost efforts to address this challenge." The central bank decided against any change in its key interest rate, which remains at 0 percent to 0.1 percent. The bond-buying program is intended to encourage borrowing and spending and help make Japan's exports more competitive. But fresh funding measures to stimulate bank lending, also announced Tuesday, could offer more relief, Capital Economics said in an analysis. "The bank is providing the backstop to all lending in Japan," it said. But since Japan's problem is not a lack of supply of credit, but falling business borrowing, "it is not a game changer," it said. In its revised outlook the central bank said the economy is expected to grow only 1.6 percent in this fiscal year, which ends in March, and 0.4 percent in the next. Earlier forecasts were for growth of over 2 percent. Consumer prices are expected to rise by 0.4 percent this year, well below the long-term 1 percent target, and by 0.8 percent in the following, it said. A fresh barrage of negative data on Japan's failing recovery Tuesday pumped up pressure for the central bank to act to help revive the world's third-largest economy.
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