Japan’s government maintained its economic view for the fourth straight month, but remained cautious about the market volatility amid falling bond yields and the weakening yen.
In the monthly economic report, released by the Cabinet Office on Tuesday, the government repeated that the Japanese economy is picking up moderately, while the slowdown of global economies poses downside risk to the Japanese economy.
Moreover, the report said full attention should be given to price increases, supply-side constraints and fluctuations in the financial and capital markets.
The government raised its view on business investment, saying capital expenditure is picking up. In September, the report had said “business investment shows movements of picking up.”
In response to rising prices and the weaker yen, reforms needed to spur growth remains the priority of the government, the report added.
The government retained its view on private consumption, exports, industrial production and corporate profits. The assessments on employment and inflation were also kept unchanged.
The Bank of Japan had intervened in the bond market last week after the 10-year Japanese government bond yield exceeded the cap of 0.25 percent.
Despite the fall in the currency, the BoJ is likely to keep its ultra-loose policy unchanged at its monetary policy meeting on October 27 and 28.
The weaker yen pushes up import prices of energy and food amid subdued wage growth, which ultimately dampen the Japanese household spending and economic growth.
The government expects the BoJ to achieve the price stability target of two percent in a sustainable and stable manner in light of economic activity, prices and financial conditions, the report said.
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