Japan Monetary Policy


Central Bank expands Asset Purchase Program

At its 18-19 September monetary policy meeting, the Bank of Japan (BoJ) unanimously decided to increase the total size of the Asset Purchase Program by JPY 10 trillion (USD 126 billion) to JPY 80 trillion (USD 1.0 trillion), in a decision that caught the market by surprise. Specifically, the Central Bank increased both the acquisition of treasury discount bills and the purchase of government bonds by JPY 5 trillion each, while leaving the rest of the program unchanged. The move, which represents the first increase in the Bank's financial asset-buying program since April, follows the Federal Reserve decision to launch another round of quantitative easing and is consistent with the Bank's objective of achieving an inflation goal of 1%. 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 stated that the domestic economy remained firm in the first half of the year, but the pick-up in economic activity has come to a halt as, "overseas economies have moved somewhat deeper into deceleration phase". The next monetary policy meeting is scheduled for 4 October.

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Japan Monetary Policy Chart

Japan Monetary Policy September 2012

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

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