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Tokyo, March 6 (Bloomberg) -- Japan's growth has stalled as exports and production level off, the central bank said in a monthly report, keeping its evaluation of the world's No. 2 economy unchanged for a fourth month.
``Economic activity remains flat amid substantial uncertainty about the outlook for the economy,'' the bank said, repeating language from last month's statement.
The bank released its evaluation a day after policy makers unanimously voted to refrain from pumping more cash into an economy sapped by five years of falling prices. The bank kept monthly purchases of government bonds unchanged at 1.2 trillion yen ($10.2 billion) at the meeting, the last chaired by outgoing Governor Masaru Hayami.
Toshihiko Fukui, a former Bank of Japan deputy governor, was named last month to succeed Hayami. Fukui won't quickly bend to government pressure to step up monthly purchases of bonds to 2 trillion yen, economists said.
``It's unlikely that the central bank will reverse policy course immediately under the new governor,'' said Shuji Shirota, an economist at Dresdner Kleinwort Wasserstein. ``It will take a while for the board to strike a consensus and agree on more policy measures.''
The No. 247 bond, which has a coupon of 0.8 percent and matures in 2013, rose 0.047 to 100.325. Its yield fell half a basis point to 0.765. A basis point is 0.01 percentage point.
Falling Prices
In today's report, the central bank also said that Japanese prices would keep falling at a gradual pace because of weak demand. The bank has promised to keep interest rates close to zero until Japan's nationwide consumer prices, excluding fresh food, stop falling from year-earlier levels.
The decline in consumer prices will likely slow because of rising oil prices and a planned increase in public medical insurance payments by salaried workers starting in April, the bank said.
The decline in Japan's nationwide consumer prices will slow to 0.4 percent in the fiscal year that starts on April 1 from this year's 0.8 percent pace, the government projects. Prices haven't risen since April 1998.
Policy makers need to boost investor confidence before the end of the fiscal year, when banks book investment gains or losses. The Nikkei 225 stock average has lost almost a quarter of its value this fiscal year, sparking concern that some banks' capital may fall below minimum levels, exposing them to seizure by the government.
Financial markets are ``stable'' ahead of the fiscal year end, the bank said in today's report.
Japan's recovery from the third recession in a decade is stalling as faltering global growth cuts demand for its exports, the main driver of growth. Economic growth fell to 0.5 percent in the fourth quarter from 0.7 percent in the third.
Exports, which accounted for more than half of growth in the fourth quarter, fell in December and January. The unemployment rate rose to 5.5 percent in January, matching a record, as retailers such as Tokyu Department Store Co. cut jobs.
Company investment in factory and equipment is ``flat,'' the central bank said in today's report.