Japanese Monetary Accommodation Enhanced

August 4, 2011

After an abbreviated two hour 40 minute Policy Board meeting that had been scheduled initially to extend to two days of discussions, the nine-person committee agreed unanimously to 1) retain a zero to 0.1% overnight money rate target range, 2) increase its asset purchases by JPY 5 trillion to JPY 15 trillion (this program was initiated at JPY 5 trillion and raised after the earthquake to JPY 10 trillion in March), and 3) raise its fund-supplying operation against pooled liquidity by JPY 4 tln to 35 trillion yen.  An earlier statement from Governor Shirakawa endorsed the Finance Ministry’s decision to undertake massive intervention.

A statement from officials retained the baseline forecast of a gradual economic recovery but flagged increased externally generated uncertainty as a result of

  • Persistent concern about U.S. fiscal consolidation even after the recent debt ceiling agreement.
  • Global financial market strains caused by the debt problems of Euroland’s peripheral members.
  • Doubts whether emerging nations can achieve price stability and economic growth at the same time.

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



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