Japan Monetary Policy


Bank of Japan brings forward monetary policy meeting

At its last meeting on 28 October, the Bank of Japan (BoJ) announced it was bringing forward the next monetary policy meeting to 4-5 November (previously scheduled: 15-16 November), a day after the Federal Reserve's Federal Open Market Committee (FOMC) meeting. Most analysts believe the BoJ is preparing to react on the Federal Reserve's decision, where further quantitative easing is expected, despite remarks by BoJ Governor Masaaki Shirakawa that the change of dates did not responded to external events. Moreover, the BoJ unveiled details regarding its JPY 5 trillion (USD 61 billion) asset purchase programme, which were in line with plans announced on 5 October. Most notably, the BoJ will allocate JPY 500 billion (USD 6.1 billion) to the purchase of corporate debt with BBB rating, a lower credit rating than in previous purchases, and the same amount to commercial paper rated A-2. Furthermore, the BoJ will purchase JPY 1.5 trillion (USD 18.3 billion) of government bonds, JPY 450 billion (USD 5.5 billion) of Exchange-Traded Funds (ETFs) and JPY 50 billion (USD 600 million) of Japan Real Estate Investment Trusts (J-REITs). Monetary authorities stated they aimed at completing the ETFs and J-REITs purchases by the end of 2011. Despite attempts by the BoJ and the government to weaken the yen, the currency continued to appreciate and reached 80._ per USD by 1 November, which is very close to its all-time low of 79.75 per USD set in April 1995.


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