As widely expected, the BoJ’s Policy Board decided to expand its Asset Purchase Programme by JPY 10 trillion. The decision was justified by pointing at the weakness of the economy. In a sign that political pressure is increasing, the BoJ is reassessing its inflation target.
Today, the BoJ’s Policy Board decided to expand its Asset Purchase Programme by JPY 10 trillion (2% of GDP). The amount will be evenly split between purchases of long-term JGB and Treasury Bills. The operation should be completed by December 2013. It takes the total size of the Asset Purchase Programme (including fixed rate funds supplying operations to JPY101 trillion) of which JPY 65 billion has already been purchased. As the decision was expected, foreign exchange markets have hardly reacted and the USD/JPY remained at around 83.9.
The Board also decided the operational details of the Stimulating Bank Lending Facility. This programme provides unlimited long-term funds at a low interest rate to financial institutions under certain conditions. The amount of lending under this programme is expected to reach more than JPY15 trillion by end March 2014.
BoJ governor, Maasaki Shirakawa, has instructed his staff to examine the necessary issues for discussion on price stability at the next meeting. It is a clear sign that the political influence on the BoJ is increasing since the LDP’s landslide victory in last Sunday’s general election. The LDP had campaigned for increasing the inflation target to 2% instead of the BoJ’s 1% goal.
The assessment of economic and price developments was largely unchanged. The Board justified the additional monetary easing by pointing at the weakness of the economy and the expectation that it will remain so for the time being. The Bank considers as one of its main tasks getting the economy out of deflation. It underlines that this can only be done by a combination of efforts by a wide range of economic agents (including the government) to strengthen the economy’s growth potential. It signals that more monetary easing will come.
By Raymond VAN DER PUTTEN
To Read the Entire Report Please Click on the pdf File Below.
Today, the BoJ’s Policy Board decided to expand its Asset Purchase Programme by JPY 10 trillion (2% of GDP). The amount will be evenly split between purchases of long-term JGB and Treasury Bills. The operation should be completed by December 2013. It takes the total size of the Asset Purchase Programme (including fixed rate funds supplying operations to JPY101 trillion) of which JPY 65 billion has already been purchased. As the decision was expected, foreign exchange markets have hardly reacted and the USD/JPY remained at around 83.9.
The Board also decided the operational details of the Stimulating Bank Lending Facility. This programme provides unlimited long-term funds at a low interest rate to financial institutions under certain conditions. The amount of lending under this programme is expected to reach more than JPY15 trillion by end March 2014.
BoJ governor, Maasaki Shirakawa, has instructed his staff to examine the necessary issues for discussion on price stability at the next meeting. It is a clear sign that the political influence on the BoJ is increasing since the LDP’s landslide victory in last Sunday’s general election. The LDP had campaigned for increasing the inflation target to 2% instead of the BoJ’s 1% goal.
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The assessment of economic and price developments was largely unchanged. The Board justified the additional monetary easing by pointing at the weakness of the economy and the expectation that it will remain so for the time being. The Bank considers as one of its main tasks getting the economy out of deflation. It underlines that this can only be done by a combination of efforts by a wide range of economic agents (including the government) to strengthen the economy’s growth potential. It signals that more monetary easing will come.
By Raymond VAN DER PUTTEN
To Read the Entire Report Please Click on the pdf File Below.
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