BoJ Takes More Easing - 27.4.2012

Early in the morning the Bank of Japan announced the outcome of its policy meeting, keeping the uncollateralized overnight call rate at 0%-0.1%. According to the central bank’s statement, the Policy Board decided to increase the total size of its Asset Purchase Program “by about 5 trillion yen, from about 65 trillion yen to about 70 trillion yen” by around end-June 2013, while “maintaining the existing schedule of increasing the outstanding amount of the Program to about 65 trillion yen by around end-2012”. The major part of the Program implies purchases of Japanese government bonds with remaining maturities extended today to three years from two years in order to encourage a decline in longer-term interest rates. As for the assessment of the current economic conditions, the Bank said business activity “has remained more or less flat”, although “shifting toward a pick-up phase as positive developments have become widespread”. However economic data released today appeared to be somewhat mixed. While the annualized growth pace of the national CPI accelerated in March to 0.5% from 0.3% in February, industrial production and retail sales figures for March failed to meet most expectations. The Japanese yen depreciated first against the greenback, but strengthened by the end of the Asian trading session to a weekly high – pair USD/JPY touched 80.48, the lowest since April 17, after rising to 81.43.