Bank of Japan announces $128 billion stimulus
Tokyo, Japan (4E) – The Bank of Japan (BOJ) on Wednesday announced it was easing monetary policy by significantly expanding its asset purchasing fund amid a slowing global economy and increased tensions with China that have derailed the recovery of its economy that relies heavily on exports.
The BOJ said it was increasing the amount of its asset purchases to 80tn yen, an increase of 10tn yen ($128bn).
In a statement, the central bank unanimously decided it was keeping interest rates steady between zero and 0.1 per cent.
News of the BOJ decision saw the yen weaken, cash bonds briefly rose and the Nikkei stock index jumped to its highest level in four months. Market players were surprised by the move as it came a month earlier than expected.
The U.S. Federal Reserve’s announcement of quantitative easing last week had increased pressure on the BOJ to ease monetary policy in order to support Japan’s export-dependent economy clearly feeling the impact of a strong currency and the austerity policies in Europe.
The fresh round of easing measures is yet another move to put the Japanese economy on a recovery path after the devastation of the March 2011 earthquake and tsunami.
Along with its latest policy decision, the BOJ also lowered its outlook for the economy saying that it has stalled, which is in contrast to its view in the previous month stating growth has picked up because of strong domestic demand.