The Bank of Japan announced further monetary easing measures on Friday. It said that it would increase its asset purchase programme by 5 trillion yen to about 70 trillion yen even as it kept its key interest rate unchanged at between zero and 0.1 per cent.
The additional monetary stimulus came despite some positive Japanese economic reports released on Friday. Japan's unemployment rate was unchanged at 4.5 per cent in March while household spending rose an inflation-adjusted 3.4 per cent from a year earlier. Core consumer prices rose 0.2 per cent in March over the previous year, registering growth for the second consecutive month.
Growth in Japan could weaken though. Another report on Friday showed that industrial production rose 1.0 percent in March and is forecast to rise another 1.0 percent in April but fall 4.1 percent in May. Indeed, Japan's manufacturing PMI fell to 50.7 in April from 51.1 in March.
In the US, growth has already weakened. US GDP grew at a 2.2 percent annualised rate in the first quarter after having grown at a 3.0 percent rate in the previous quarter. Growth was pulled down by slower business spending and reduced government spending but these were partly offset by a 2.9 percent increase in consumer spending.
An increase in the Thomson Reuters/University of Michigan’s index of consumer sentiment to 76.4 in April from 76.2 last month suggests that consumer spending will continue to prop up the US economy at the beginning of the second quarter.