The Bank of Japan holds off from further monetary stimulus, defying market expectations even as soft demand, weak consumption and a surge in the yen threaten a fragile economic recovery. David Pollard reports
The BoJ stunned markets with a move into negative rates in January. Why then, shock markets again this time not easing policy, when expected to? SOUNDBITE (English) IHS GLOBAL INSIGHT, DIRECTOR OF SOVEREIGN RISK ANALYSIS, JAN RANDOLPH, SAYING: "The battle with the yen, an attempt to try to weaken the yen, which is probably the ultimate aim, wasn't working, and they weren't going to try again. And I think they're resting their hopes on the more neutral stance from the Fed overnight, and the possibility of a U.S. rate hike in June, which would take the pressure off the yen, so they're keeping their powder dry for the moment." But still ready to use that powder - and with a compelling argument ... Consumer prices suffered their sharpest fall in three years last month, household spending is down. An already strong yen saw its biggest rise in six years after this decision - stocks taking a dive. For Japan bulls, a fall in unemployment and a rebound in industrial output point to a pick-up. For others, that's something too soon to call. SOUNDBITE (English) IHS GLOBAL INSIGHT, DIRECTOR OF SOVEREIGN RISK ANALYSIS, JAN RANDOLPH, SAYING: "We're going to have to wait for more data to come through to suggest that Japan is seriously back in some sort of recovery mode, which it is not at the moment." Kuroda though ruling out any idea of so-called 'helicopter money' - or underwriting government debt to give money directly to citizens. That impossible to adopt under Japanese law, he said. But the Bank downgraded its own inflation targets - Kuroda also telling his audience there were no limits to monetary policy.