Bank of Japan Meeting Review: Continuing Stimulus

April 7, 2011

The Bank of Japan met over two days for a total of six hours and 52 minutes, deciding unanimously to 1) promote a 0-0.1% overnight money rate target through its daily short term operations and 2) introduce a new facility to provide financial institutions located in the disaster-stricken region with longer-term funds (up to a year) to support their initial response effort to meet credit needs for restoration and rebuilding.  Policymakers also agreed to 3) broaden in principle the range of eligible collateral for its money market operations, and 4) instructed BOJ staff to examine how those two initiatives might be implemented and to report back to the Board at its next meeting.  Reflecting aggressive policy easing since the March 11th earthquake, the BOJ’s balance sheet at end-March showed assets of JPY 142.9 trillion, up from JPY 128.7 trillion at the end of calendar 2010.

A statement released today by the BOJ Board identifies strong downward pressure on the production side of the economy reflecting

  • Damaged facilities,
  • Broken supply lines,
  • Constrained electrical power.

The baseline forecast nonetheless sticks to the view that a modest economic recovery path will resume beyond the near term and that not long from now consumer prices, excluding seasonal foods, will be posting on-year positive changes.

At the next scheduled Policy Board meeting on April 28th, officials will be releasing an updated semi-annual “Outlook for Economic Activity and Prices.”

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.



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