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11869
Tue, 07/08/2008 - 12:39
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https://oananews.org//node/11869
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BOJ lowers assessment for 8 of 9 regional economies
TOKYO, July 8 (Kyodo) - The Bank of Japan on Monday revised downward its assessment of economic activities for eight of the country's nine regions, citing sluggish private consumption.
The downward reassessment was made at the one-day meeting of the central bank's 32 branch managers, where BOJ Governor Masaaki Shirakawa warned that global inflationary pressures have been increasing with prices expected to rise further, affected by high commodity prices.
The central bank said in its quarterly ''Sakura Report'' on regional economies that ''growth of the economy as a whole continued slowing recently, mainly due to the effects of high energy and materials prices, although there were some regional differences.''The bank downgraded the assessment for Hokkaido, Hokuriku, Kanto-Koshinetsu, Tokai, Kinki, Chugoku, Shikoku and Kyushu-Okinawa regions. It left its view unchanged only for Tohoku.
The report underlined weak private consumption, saying that ''its sluggishness became increasingly apparent.''At their previous meeting in April, the bank also cut the assessment for eight regions, except for Hokkaido.
In the latest report, the bank pointed to slowing exports, decreasing corporate profits and slower business fixed investment.
''Corporate profits decreased recently, mainly due to the deterioration in terms of trade, and business sentiment remained cautious,'' it said.
Earlier this month, the BOJ said business confidence among Japanese companies has been deteriorating as the index for large manufacturers in the bank's closely-watched Tankan sentiment survey in June stood at 5, down from 11 three months earlier and the lowest since September 2003.
On Monday, Shirakawa told the branch managers, ''It is highly possible that wholesale prices will continue their rises against the backdrop of hikes in global commodity markets.''Annual changes in core consumer prices, which exclude volatile fresh food prices, ''are expected to remain positive'' on rises in prices for petroleum products and nonperishable foods such as grains, he added.
The comment came after Japan's core consumer price index, a key inflation gauge, rose 1.5 percent in May from a year earlier, marking the fastest pace of increase in more than 15 years.
Japanese wholesale prices soared 4.7 percent in the same month on year, the fastest rate of growth in over 27 years.
Masahiro Samejima, head of the BOJ Osaka Branch, said in a news conference after the branch managers' meeting that higher commodity prices have increasingly hurt corporate earnings.
''Raw material costs have risen at a very fast pace, and (companies) have not passed them on to their product prices sufficiently,'' he told reporters.
As for the Japanese economy, Shirakawa held on to an earlier view that economic growth has been slowing, affected by rising energy and raw material costs.
The bank has kept its main interest rate at 0.5 percent for more than a year.
Given the lackluster economic outlook, the central bank is expected to keep the interest rate unchanged when its Policy Board next meets on July 14-15.
The downward reassessment was made at the one-day meeting of the central bank's 32 branch managers, where BOJ Governor Masaaki Shirakawa warned that global inflationary pressures have been increasing with prices expected to rise further, affected by high commodity prices.
The central bank said in its quarterly ''Sakura Report'' on regional economies that ''growth of the economy as a whole continued slowing recently, mainly due to the effects of high energy and materials prices, although there were some regional differences.''The bank downgraded the assessment for Hokkaido, Hokuriku, Kanto-Koshinetsu, Tokai, Kinki, Chugoku, Shikoku and Kyushu-Okinawa regions. It left its view unchanged only for Tohoku.
The report underlined weak private consumption, saying that ''its sluggishness became increasingly apparent.''At their previous meeting in April, the bank also cut the assessment for eight regions, except for Hokkaido.
In the latest report, the bank pointed to slowing exports, decreasing corporate profits and slower business fixed investment.
''Corporate profits decreased recently, mainly due to the deterioration in terms of trade, and business sentiment remained cautious,'' it said.
Earlier this month, the BOJ said business confidence among Japanese companies has been deteriorating as the index for large manufacturers in the bank's closely-watched Tankan sentiment survey in June stood at 5, down from 11 three months earlier and the lowest since September 2003.
On Monday, Shirakawa told the branch managers, ''It is highly possible that wholesale prices will continue their rises against the backdrop of hikes in global commodity markets.''Annual changes in core consumer prices, which exclude volatile fresh food prices, ''are expected to remain positive'' on rises in prices for petroleum products and nonperishable foods such as grains, he added.
The comment came after Japan's core consumer price index, a key inflation gauge, rose 1.5 percent in May from a year earlier, marking the fastest pace of increase in more than 15 years.
Japanese wholesale prices soared 4.7 percent in the same month on year, the fastest rate of growth in over 27 years.
Masahiro Samejima, head of the BOJ Osaka Branch, said in a news conference after the branch managers' meeting that higher commodity prices have increasingly hurt corporate earnings.
''Raw material costs have risen at a very fast pace, and (companies) have not passed them on to their product prices sufficiently,'' he told reporters.
As for the Japanese economy, Shirakawa held on to an earlier view that economic growth has been slowing, affected by rising energy and raw material costs.
The bank has kept its main interest rate at 0.5 percent for more than a year.
Given the lackluster economic outlook, the central bank is expected to keep the interest rate unchanged when its Policy Board next meets on July 14-15.
