Japan Monetary Policy


Central Bank maintains Asset Purchase Program, changes composition

At its 12 July monetary policy meeting, the Bank of Japan (BoJ) decided to maintain the size of the Asset Purchase Program at JPY 70 trillion, in a decision expected by the market. However, the Central Bank changed the composition of the program by boosting asset purchases, specifically by increasing the acquisition of treasury discount bills by JPY 5 trillion, while simultaneously reducing the maximum outstanding amount of fixed-rate loans by the same quantity. In a separate decision, the Bank decided to leave the collateralized overnight call rate unchanged at around 0 to 0.1%, which was widely expected by the market. The BoJ maintained its assessment that economy activity has started picking up moderately as domestic demand remains firm mainly supported by reconstruction-related demand. On the external front, the Bank stated that overseas economies have shown some improvements, albeit they remain in a deceleration phase. In addition, the Bank signalled that global financial markets continue to be dragged down by the European debt crisis. The next monetary policy meeting is scheduled for 8 August.

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Japan Monetary Policy Chart

Japan Monetary Policy July 2012

Note: Collateralized overnight call rate in %.
Source: Bank of Japan (BoJ).

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