Bank of Japan

December 18, 2015

After a Board meeting of five hours 36 minutes over two days that wasn’t expected to producer any policy changes, a statement was released that pushed out the targeted average maturity of the bank’s JGB portfolio to 7-12 years from 7-10, launched a second EFT purchase program amounting to slightly less than $2.5 billion per year that will focus on equities of companies investing in capital-expanding directions, and doubled the cap on REIT purchases to 10% of an issue.  These modifications were explained a technical adjustments to promote the transmission of policy rather than an augmentation of quantitative and qualitative easing as was done in October 2014.  In response to the statement, stocks initially rose sharply but then collapsed as Governor Kuroda’s press conference threw cold water on the significance of the changes.  The modifications were opposed by a third of the Policy Board.  The statement upgraded the assessment of exports to “picking up” from “more or less flat” but otherwise left the view of growth and price trends as they were at the time of the November meeting.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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