Bank of Japan sees recession easing

THE RATE of deterioration in the Japanese economy has begun to slow, the country’s central bank said yesterday, signalling that the worst of its recession could be over.

The Bank of Japan (BoJ) opted to leave interest rates unchanged at 0.1 per cent, but issued a more optimistic outlook based on increased production in the manufacturing sector and rising exports.

In a statement, the BoJ said: “Japan’s economic conditions, after deteriorating significantly, have begun to stop worsening”.

It added that financial conditions were still difficult, but said the economy was likely to begin “levelling out over time”.

There was no change or extension of the BoJ’s programme of buying up corporate bonds in a strategy of quantitative easing, a scheme due to end in September.

The bank’s optimism was fuelled by a 5.9 per cent rise in factory output during April. But it warned that inflation could fall faster than expected, depending on global and domestic market conditions.