Shares in Japan rise to two-month high after BOJ decision

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Shares in Japan rose to a two-month high on Friday after the country's central bank decided to keep its monetary easing policy steady.

The benchmark Nikkei 225 initially fell on the decision by more than 0.4%.

But as investors digested the news, and uncertainty around the much-anticipated Friday announcement dissipated, the index recovered to close up 0.78% at 19,083.1 points.

The bank's 2% inflation target was also pushed back by about six months.

While forecasts for economic growth for the year to March 2016 were also lowered to 1.2% from 1.7%.

Bank of Japan's (BOJ) governor Haruhiko Kuroda told reporters on Friday the inflation target timing had been delayed "largely due to the effect of energy price falls".


The BOJ's current stimulus package is designed to give a boost to the world's third-largest, but struggling, economy.

Private consumption makes up some 60% of Japan's economic activity, but the country has struggled with deflation, or falling prices, for more than 15 years. Lower prices for goods in the country have seen consumers hold on to their money in the hope of even lower prices later on.

The stimulus packaged is designed to encourage lending, which in turn should see consumers spending more.

Earlier on Friday, a string of domestic data showed Japan's core consumer inflation number had fallen 0.1% in September from a year ago, household spending had fallen 0.4% year-on-year while unemployment had remained steady at 3.4% compared to August.

The data fuelled some speculation the bank would make a move. But eight out of nine board members voted in favour of the decision.

Rest of Asia

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Shares across the rest of Asia were also largely down on Friday after US data showed a sharp slowing in economic growth.

Investors are keenly watching shares in China after the government announced the end of its one-child policy.

Shares in some companies that make baby products rose sharply after the decision. Danone and Nestle are seen as likely to benefit, with baby formula sales in China expected to double in the next five years.

Hong Kong's Hang Seng index finished lower by 0.8% at 22,640.04, while the Shanghai Composite closed down 0.1% at 3,382.56.

Elsewhere, in Australia, the benchmark S&P/ASX 200 closed down 0.52% at 5,239.40.

Mining-related shares weighed on the index as "worries about an oversupply of steel saw the iron ore price fall back below $US50 per tonne, which weighed on Australian miners," said economist Shane Oliver.

"The global steel and iron ore glut looks like it will push the iron ore price to around $US40 in the year ahead," he added.

In South Korea, the benchmark Kospi index closed down 0.23% at 2,029.47 points.

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