The Bank of Japan (BOJ)’s two-day policy board meeting has concluded:
- Retains plan for 60 – 70 tln yen annual rise in monetary base
- To extend loan scheme aimed at encouraging banks to lend to growth sectors beyond March 2014 deadline (as expected) – extended by one year
- Voted down ( 8 – 1 ) proposal by Kuichi to make 2% inflation target a medium to long term goal
- Keeps economic assessment unchanged, says economy continues to recover moderately
- Says private consumption has remained resilient
- Improvement in job market and incomes have continued
- Can see front loading in demand ahead of sales tax hike
- To double the size of funds provided under loan schemes targeting growth sectors, cheap lending to banks that boost lending (expanded to 7tln yen)
- Domestic and external demand is increasing moderately
- Inflation expectations appear to be rising in the whole
- Exports have generally been picking up
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Quick anlayst reactions:
Fast FT: BoJ holds steady, no clear hint of further easing
- Once again held monetary policy steady
- Statement didn’t indicate any plan to crank up its printing press higher later this year
- Continues to aim for a 2 per cent inflation target within 2 years
- Will also continue its current rate of asset purchases – enough to increase the country’s monetary base by Y60tn to Y70tn per year
- The BoJ also extended special loan facilities set to expire next month, for another year
- It will “double the scale” of the loan scheme
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USD/JPY and the Nikkei are tearing it up. After an initial dip, USD/JPY has surged 40+ points (see definition of ‘whipsaw’ earlier today)
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ADDED – why the expansion of the loan program was a big deal
