• BOJ keeps monetary policy steady, pledges to increase monetary base at annual pace of 80 trln yen
  • Decides to extend deadline for loan programmes aimed at encouraging banks to boost lending beyond March
  • Decides to expand size of loan programme aimed at encouraging banks to boost lending
  • Deadline for loan programmes extended by 1 year
  • Says expands loan programme for growth industries to 10 trln yen from 7 trln yen
  • Says to allow banks that don’t have accounts at BOJ to tap existing loan scheme aimed at boosting lending
  • BOJ’s policy decision on base money was made by 8-1 vote
  • BOJ’s decision on extending deadline on loan schemes was made by unanimous vote
  • BOJ board member Kiuchi votes against keeping policy steady, says policy before oct 31 easing was appropriate
  • BOJ board member Kiuchi proposed making 2 pct inflation target a medium- to long-term goal, which was turned down by 8-1 vote
  • Says Japan economy continues to recover moderately as a trend with tax hike effect subsiding as a whole
  • Says core CPI excluding effect of tax hike is in range of 0.5 to 1.0 pct
  • Says pace of increase in core CPI likely to slow for time being, reflecting energy price falls

CPI forecasts lowered for 14/15 and 15/16, raised for 16/17:

  • Japan core CPI expected +1.0 pct in fy2015/16 vs +1.7 projected in October
  • Japan core CPI expected +2.2 pct in fy2016/17 vs +2.1 projected in October
  • Japan core CPI +0.9 pct in fy2014/15 vs +1.2 projected in October

(Note that the ‘official’ measure of core inflation in Japan excludes food, but includes energy. )

GDP forecasts boosted:

  • Japan real GDP expected +2.1 pct in fy2015/16 vs +1.5 projected in October
  • Japan real GDP expected +1.6 pct in fy2016/17 vs +1.2 projected in October
  • Japan real GDP expected -0.5 pct in fy2014/15 vs +0.5 projected in October

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Quick take from ES at ForexLive … if they’ve (overall) boosted their forecasts from GDP doesn’t that make further policy easing less likely? They might not hit their inflation goal but isn’t the bigger prize a stronger economy? Or, are their forecasts not worth the pixels they’re written in?

Comments, as always, welcome.