BOJ's Shirokawa Says Japan's Economy Is "Clearly Slowing"

The BOJ decided to leave rates at 0.5% because Japan's economy is "clearly slowing". Waning corporate profit growth is slowing capital expenditures, production is flat and materials costs are sharply higher, which is also negatively affecting personal consumption. Inflation in consumer staples is particularly noticeable, while companies are finding it difficult to transfer all of higher input costs to final selling prices. In addition, the BOJ sees the risks to the global economy remaining to the downside.

This is quite a different spin than interest rate traders were trying to project, and throws cold water on the conjecture than inflation in Japan will somehow stimulate domestic consumption, as well as lead to higher loan-deposit spreads for the banks, thereby boosting their profits.