Bank Of Japan Cuts Economic Assessment In September

By BridgeNews The Bank of Japan downgraded Sept. 20 its core economic assessment for the fourth straight month, two days after it acted in concert with other central banks by further easing its credit grip. The BOJ's September economic report said adjustments in economic activity are becoming more severe, as substantial declines in production, starting from a fall in exports, started to adversely impact labor and income conditions. In efforts to stabilize global financial markets following the terrorists attacks in the U.S. last week, the U.S. Federal Reserve and European Central Bank made emergency coordinated rate cuts Sept. 17. The BOJ followed suit on Sept. 18. BOJ board members decided to increase the current account balance target to more than 6 trillion yen (US$52 billion) from 6 trillion yen, but the BOJ didn't announce a specific number of the reserve target. The BOJ also cut the discount rate to 0.10% from 0.25%, according to a statement issued by the BOJ. The BOJ's September report said private consumption is highly likely to become weaker gradually, while the worsening employment and income conditions may continue. The September report also warned that the uncertainties over the outlook of the overseas economy, particularly in the U.S., is growing, while the global economy continues to decelerate concurrently. "Overall, adjustments in economic activity, starting from the decline in exports, are expected to have a negative influence on domestic demand gradually and this in turn will possibly prolong the ongoing adjustments," the BOJ concluded. As for prices, the BOJ says "prices will be in gradual downward trend for the time being" in its September report, slightly more bearish than the previous view in August that "prices will remain weak."

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