Japan's Monetary Base Up 10.9 Percent In January

Japan's monetary base rose in January compared to that in the same month last year, indicating that the monetary easing policies are leading to an increase in the amount of currency in circulation, which, in turn, results in reviving economic growth.

According to the data released Monday by the Bank of Japan, or BoJ, the country’s monetary base, which measures the change in the total amount of domestic currency in circulation and current account deposits held at the central bank, advanced 10.9 percent in January from an 11.8 percent rise in December and below the analysts’ expectation of 13.2 percent. An increase in the supply of money is expected to lead to additional spending, which, in turn, results in inflation.

This data comes after last month when the BoJ raised the inflation target to 2 percent from 1 percent and introduced open-ended asset-purchasing as part of its aggressive monetary stimulus measures intended to revive economic growth momentum. The central bank confirmed that it would pursue the monetary easing policy measures aimed at achieving the price stability target at the earliest possible time.

Beginning January 2014, the central bank will commence buying 13 trillion yen ($145 billion) in assets every month, which will include 2 trillion yen in Japanese government bonds. The central bank has raised concerns that Japan’s economy remains relatively weak.

Japan’s industrial output rose in December but less than expected, indicating that the world’s third-largest economy continues to weaken. According to data released last week by the Ministry of Economy, Trade and Industry, Japan’s industrial production, which measures the total inflation-adjusted value of output from manufacturers, mines and utilities, rose 2.5 percent in December, from a 1.4 percent decline in November but below the analysts’ forecast of 4.5 percent.

Meanwhile, data released last week by the Ministry of Economy, Trade and Industry showed that Japan’s retail sales, which measures the change in the total value of inflation-adjusted sales at the retail level, rose 0.4 percent in December in comparison to those in the same period last year, but down from a 1.3 percent increase reported in November.

Investors see a critical need for policymakers to develop measures that strengthen the growth potential of the economy, which many expect to be announced this year.