Japan's central bank maintains economic view, urges US to resolve budget standoff

Japan's central bank on Friday opted to maintain its ultra-loose monetary easing policy, which aimed at doubling its monetary base through asset purchases to hit its two- percent inflation target in as many years. Following the conclusion of a two-day policy meeting, the Bank of Japan's (BOJ) nine-member Policy Board, besides unanimously voting to maintain its monetary policy, also kept its view of the domestic economy unchanged, stating that it is "recovering moderately" as business sentiment and consumer spending continues to improve. On the outlook for the economy, the BOJ said the bank expected it to continue to recover moderately and stated that overseas economies were also moving towards picking up. At a press conference following the board meeting, BOJ chief Haruhiko Kuroda hailed the central government for pushing forward with a plan to double the nation's sales tax in two stages starting April and maintained it was a prudent step towards reducing the nation's burgeoning public debt at more than twice the size of Japan's economy. Kuroda also said that the government's plans to safeguard against an economic downturn following the implementation of the tax hike with a 5 trillion yen (around 51 billion U.S. dollars) stimulus package, was a vital contingency that could help trigger growth. The central bank chief, however, did voice his concern over the current budget impasse in the United States, which saw Tokyo stocks plummet to one-month lows and the yen rise, and send Japan' s key export-related issues lower. Kuroda said he was concerned that if the issue continued for too long, it could have a severe affect on global markets, leading to slumping investor sentiment. He urged the U.S. government to resolve the issue at the earliest possible opportunity, but declined to remark specifically on the U.S. potentially defaulting on its debt, and said Japan's central bank was poised to handle a possible default if the U.S. Congress fails to raise the debt ceiling by the Oct. 17 deadline. Separately, Japan's Deputy Prime Minister Taro Aso urged the U. S. Congress to raise the federal government's debt ceiling as a default could severely destabilize the global economy. Aso, who also doubles as Finance Minister, suggested that if the situation is not resolved before the G20 meetings of financial officials in Washington next week, then certain contingency measures may have to be traversed. Aso, however, said that the world's largest economy has faced similar problems in the past, which has the experience and know- how to extrapolate itself from its current predicament.