The central bank of Japan has decided to leave monetary policy unchanged despite the latest data showing that the country has slipped back into a recession in the wake of the March earthquake and tsunami, according to Bloomberg. On Friday, the Bank of Japan unanimously voted to maintain the ¥30 trillion credit program and ¥10 trillion asset-purchase fund that have been used as primary policy tools, while the key overnight interest rate was kept at 0.1%. The deputy governor Kiyohiko Nishimura also dropped his call from last month to expand the asset-purchase scheme.
The decision comes on the heels of a report that showed an annualized 3.7% drop in Japanese gross domestic product in the first quarter, but governor Masaaki Shirakawa insisted that officials expect the economy to rebound later in the year as the after-effects of the natural disaster are dissipated. Mari Iwashita of SMBC Nikko Securities said that the non-action could be in part to preserve the efficacy of future action, adding, “Chances for additional easing are still alive,” while forecasting for an expansion of ¥5 trillion around August.