Thursday, August 4, 2011

Bank of Japan Holds Rate at 0.10%, Expands QE

The Bank of Japan held its uncollateralized overnight call rate unchanged at a range of 0 to 0.1% by a unanimous vote.  However the BOJ did decide "to enhance monetary easing by increasing the total size of the Asset Purchase Program by about 10 trillion yen from about 40 trillion yen to about 50 trillion yen".   The Bank said it "deemed it necessary to further enhance monetary easing, thereby ensuring a successful transition from the recovery phase following the earthquake disaster to a sustainable growth path with price stability,".

The Bank of Japan also held its monetary policy interest rate unchanged in July this year.  The Bank last changed its asset purchase program in March this year, when it added a further 5 trillion yen to its target.  Japan reported annual headline consumer price inflation of 0.2% in June, and 0.3% in both May and April, meanwhile core inflation rose 0.6% in April, as Japan finally begins to see some positive inflation figures.  The Bank is forecasting real GDP growth of 0.2-0.6% in fiscal 2011, and 2.5-3.0% in fiscal 2012.


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