Bank of Japan Review
November 20, 2012
The BOJ nine-person Policy Board did ease its monetary stance further after this month’s meeting, having done so in both September and October. The decision was unanimous and expected. A statement from officials also retained its economic assessment that Japan’s economy “has weakened somewhat” and is likely to remain relatively weak for “the time being.” The downturn is attributable to a “deceleration phase” in other economies, especially in Europe. Core inflation will continue to hover near zero for the time being.
The Bank of Japan has run a virtual zero interest rate policy for just over two years since cutting the overnight money target to a range of 0 to 0.1% in early October 2010. The central bank also has an asset-buying program. The limit on such quantitative easing was raised last February from JPY 55 trillion to JPY JPY 65 trillion, then hiked to JPY 70 trillion in April, JPY 80 tln in September and JPY 91 trillion at the meeting on October 30. The current limit is not projected to be fully used until the end of 2013. More easing is coming, especially if the LDP wins next month’s election. The Liberal Democratic Party leader wants to change the BOJ law, boosting its working definition of price stability from 1% now to at least 2%. BOJ Governor Shirakawa’s 5-year term ends March 19.
Copyright 2012, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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