Bank of Japan Keeps Rates On Hold - 28 January 2010

The Bank of Japan has maintained its policy of low interest rates following a unanimous decision of the board. The board identified tackling the deflationary pressure that is bedevilling the Japanese economy as a critical challenge and is of the opinion that the Japanese economy is improving but that continued governmental support was needed to keep things on track. The board expects the economy to shrink by a further 2.5% this year, but this view is more optimistic than their earlier prediction of a 3.2% contraction.


Japanese Export Growth

Japan has posted growth in its exports for the first time in 15 months according to figures released for December. The year-on-year rise was 12.1%. The rally has been led by demand from China and other Asian trading partners. Indeed, according to the Japanese Finance Ministry, China has just overtaken the USA as Japan’s biggest export market and many experts believe that China will soon replace Japan as the world’s second largest economy after the USA.


US House Price And Consumer Confidence Rise

The price of homes in the US has risen for the past six months for which figures are available. Data suggests that November saw a 0.2% rise over the previous month’s figures. In 14 out of 20 cities that were surveyed, prices had risen, however, David Blitzer, chairman of Standard and Poor’s index committee, cautioned that the outlook in the sector remained mixed and that whilst some stability had been achieved there was no sign of a sustained, broad based recovery yet. The other morsel of positive news to emerge from the USA was that the consumer confidence index had reached its highest point in a year after a third consecutive month of improvement. The US domestic market accounts for 70% of US economic activity.