Japanese Yen: BOJ Expands Asset Purchases
BOJ Expands Asset Purchases
The Bank of Japan took more easing measures Thursday, following the intense campaign by incoming prime minister Shinzo Abe for the central bank to step up its fight against deflation.
The central bank decided to expand the size of its asset purchase program, the main tool of monetary easing with interest rates near Zero, and promised to review at its next meeting in January its current inflation goal, a demand of Mr. Abe during Japan’s parliamentary campaign.
“One by one, what we called for in the campaign is materializing,” Mr. Abe told reporters following the BOJ decision.
Mr. Abe’s party won a landslide victory in Sunday’s elections, and will formally be selected prime minister next week. Emboldened by his party’s electoral victory, Mr. Abe has turned up the heat on the BOJ, asking Gov. Masaaki Shirakawa in a rare one-on-one meeting this week to toughen its price goal.
In a move expected by financial markets, the BOJ’s policy board Thursday voted unanimously to expand its asset purchase program by more than 10%, by JPY 10-T to JPY 101-T. Mr. Abe’s influence was evident during the 2-day policy board meeting.
In its statement, the BOJ said that policy board member Koji Ishida wanted even more extensive action, proposing to cut rates on the excess reserves that commercial banks deposit with the central bank, to Zero from the current 0.1%. The proposal was voted down 8 to his 1.
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Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.
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