TOKYO, Sept. 19 (Xinhua) -- The Bank of Japan (BOJ) on Thursday voted to leave its ultra-easy monetary policy unchanged, despite a number of other global central banks cutting rates to underpin their economies due to uncertainties about global growth and as concerns from economists here about imminent and longer-term headwinds facing the economy continue to rise.
At the conclusion of the central bank's two-day policy-setting meeting, the BOJ Policy Board opted to keep unchanged the short-term interest rate at minus 0.1 percent and and keep its long-term interest rates at close to zero.
The central bank's board at the conclusion of the meeting also voted to leave unchanged its massive asset purchasing program.
"It is necessary to pay closer attention to the possibility that the momentum toward achieving the price stability target will be lost, as slowdowns in overseas economies have continued to be observed, and their downside risks seem to be increasing," the BOJ Board said in a statement issued Thursday.
The BOJ's decision to maintain its easing policy came on the heels of the U.S. Federal Reserve cutting its interest rates for a second time this year overnight, with economists hedging that a third cut could be possible by the end of the year, to support the world's largest economy.
The European Central Bank (ECB), meanwhile, also lowered its rates for the first time in more than three years last week to help bolster the eurozone economy, with the ECB also saying its purchasing of government bonds would be re-implemented.
The BOJ standing pat on its monetary policy came despite concerns a comparatively firm yen against the U.S. dollar following the Fed's move will negatively impact Japan's key exporters, who rely on a weaker yen to boost profits when they are repatriated from overseas markets, as well as maintain or upgrade guidances and their overall competitiveness in global markets.
BOJ Governor Haruhiko Kuroda at the bank's post-meeting press conference underscored the issue, stating that sentiment among exporters is indeed weakening.
"Exports, output and manufacturers' sentiment are weakening," the BOJ chief said.
The BOJ will also have to contend with a planned sales tax hike from eight to 10 percent in October, which will almost certainly see consumption, including business and household spending significantly slump, as the BOJ continues to grapple to reach its lofty 2 percent inflation target.
The point was glossed over by Kuroda on Thursday, who said that momentum towards achieving the many times postponed 2 percent inflation target was not losing steam.
"I don't think the economy is about to lose momentum for hitting our price goal," said Kuroda.
Economists have maintained that the BOJ's perpetually optimistic view of conditions in Japan and its seeming inability to take action to support the economy as the consumption tax hike looms and social security costs are ballooning due to the nation's rapidly aging and shrinking society, which is hollowing out the workforce, may lead markets to lose confidence in Japan's central bank.
Kuroda, however, in contrast to leading economists' opinions, maintained Thursday that consumption and spending remained firm and domestic demand had not and possibly would not waver, even though falling domestic demand and spending after Japan's previous sales tax hike plunged the nation into recession.
"But consumption and capital expenditure are fairly strong. Domestic demand is firm," said Kuroda.
Fears may grow, economists have also said, that the BOJ's "arsenal" of policy tools for additional stimulus measures, may in fact be running out, with the bank also having to deal with not only domestic downside pressures, but also the impact of global trade issues.
Japan's own current trade spat with South Korea, which could escalate with dire economic consequences if not reined in, economists have said, could have a distinctly negative bearing on Japan's own economic growth henceforth.
As has traditionally been the case with Japan's central bank, in part to combat the nation's "deflationary mindset," meaning the bank's tone is, more often than not, a rosy one, Kuroda said he does not see Japan's economic situation worsening.
"I don't think Japan's economic outlook is worsening sharply," the BOJ chief said, true to form.
