Japan July monetary base up 25.1 pct, pace slowing
TOKYO, Aug 2 (Reuters) - Japan's monetary base -- money in
circulation plus bank deposits at the central bank -- rose at a
milder pace in July, but still recorded its 11th straight
double-digit percentage gain on a year-on-year basis.
The Bank of Japan (BOJ), which has been flooding the
financial system with cash in an attempt to revive the economy,
said on Friday that the monetary base rose 25.1 percent in July,
after gains of 27.6 percent in June and 29.7 percent in May.
The figure is one gauge of how much money the central bank is
doling out to the banking system.
Strong monetary growth in theory boosts economic activity by
encouraging banks to pass money on to companies and households.
But analysts have said the measure has yet to make a big mark
on economic growth as banks remain reluctant to lend and
companies and households in the grip of deflation refrain from
spending.
Although the pace of monetary base growth slowed, idle
liquidity in the financial system remains high.
The BOJ launched its "quantitative easing" policy in the
spring of last year, prompting a prolonged, steep rise in the
monetary base. It has set lofty targets for current account
deposits at the central bank, currently of 10-15 trillion yen ($83
billion-$125 billion).
Analysts say a financial system crippled by bad debt
continues to prevent that money from filtering through to the real
economy.
Japan has also suffered from falling prices despite the fact
that its monetary base is expanding at the same pace as in 1974
when inflation hit over 20 percent due to a surge in global
oil prices.
Japan is in the midst of an economic recovery led by
exports, but economists have questioned the sustainability of
growth, with capital expenditure and consumer spending still
sluggish and export prospects clouded by a strengthening yen.
($1=119.77 yen) |
