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Business

Bank of Japan lifts economic outlook

Meeting for the last time this year, Japan's central bank governors have boosted their view of the world's third-largest economy. They specifically noted the pickup in exports on the back of a weaker national currency.

Ending their last policy meeting in 2016, Bank of Japan governors on Tuesday indicated their assessment of economic developments in the Asian country had improved.

Policymakers held fire on further stimulus and said they would maintain a plan to keep the yield on government 10-year bonds around zero as part of a broader bid to foster growth.

The central bank failed to provide an exact timeline for winding down its 80-trillion-yen ($760-billion, 732-billion-euro) annual asset purchase program.

""We expect policymakers to scale back the annual pace of purchases to 75 trillion yen sometime next year, though the bank will want to avoid the impression that this constitutes a withdrawal of stimulus," Capital Economics analyst Marcel Thieliant said in a statement.

The currency factor

The Bank of Japan said the economy was likely to turn to a moderate expansion in the months ahead.

The yen has fallen more than 17 percent against the greenback since Donald Trump's US presidential election win in November fanned speculation that his plans for government spending and tax cuts would force the Federal Reserve to hike borrowing costs further.

A weaker yen is good news for Japan's exporters as it enhances their competitiveness and profitability.

BoJ's upbeat tone came as Prime Minister Shinzo Abe's big-spending plan to kick-start the economy had failed to yield convincing results. Japan's recovery had been wobbly, with Tokyo this month downgrading its July-September GDP growth estimate to 0.3 percent from an initial 0.5-percent reading.

hg/jd (AFP, dpa)

 

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