Japan: Central Bank holds off new stimulus
November 20, 2012
At its 19-20 November monetary policy meeting, the Bank of Japan (BoJ) decided to maintain the Asset Purchase Program unchanged, in a decision widely expected by the market. The Bank also decided to leave the collateralized overnight call rate unchanged at between 0 to 0.1%, in line with market expectations. The BoJ considereded that the economy will remain "relatively weak for the time being", thereby raising expectations of further action in the next monetary policy meeting scheduled for 19 December. Previously, at its 30 October monetary policy meeting, the Bank of Japan (BoJ) unanimously decided to increase the total size of the Asset Purchase Program by JPY 11 trillion (USD 139 billion) to JPY 91 trillion (USD 1.1 trillion), in a decision expected by market analysts. Specifically, the BoJ boosted both the acquisition of treasury discount bills and the purchase of government bonds by JPY 5 trillion each, while marginally increasing the rest of the program. The move represents the second increase in the Bank's financial asset-buying program following the additional JPY 10 trillion added in the 18-19 September meeting. Moreover, the BoJ introduced the "Stimulating Bank Lending Facility", which will offer unlimited loans of up to 4 years to commercial banks at the uncollateralized overnight rate.