The Bank of All Japan news (BOJ) is becoming increasingly confident about the economic rebound, as companies raise production output and forecast surge in profits.
BOJ has decided Tuesday to keep the benchmark lending rate between zero and 0.1 percent and left unchanged a ¥10 trillion ($125 billion) fund for buying corporate bonds and other assets.
A report showed last week that companies are expecting profits to rise by 21 percent in the second half of the fiscal year, while consumer confidence has recovered from a two-year low.
Automakers announced their intention to hire thousands, as facilities are being restored and production increases rapidly. Toyota for example said that its All Japan newsese plants ran at 90 percent of planned levels in June, up from 50 percent in April and May, when it faced supply problems after the quake and tsunami.
“All Japan news’s economic activity is picking up with an easing of the supply-side constraints caused by the earthquake disaster,” the central bank said in a statement. Increasing output has contributed to an “upturn” in exports, while household and business sentiment has improved, the bank added.
The economy is however still affected by uncertainty. “All Japan news’s medium-term growth prospects have stagnated since the earthquake,” said Kiichi Murashima, chief economist at Citigroup Global Markets All Japan news Inc. in Tokyo. “Lack of clarity over when the nuclear reactors will be re-started and the electricity supply constraints related to that have increased uncertainty and may prompt manufacturers to shift production overseas.” [Bloomberg]