Bank of Japan Leaves Stimulus Program Unchanged


Bank of Japan decided on December 20th to keep its monetary policy unchanged, citing the economy has been recovering moderately. The bank will keep conducting money market operations so that the monetary base will increase at an annual pace of about 60-70 trillion yen as long as it is necessary to achieve the price stability target of 2 percent.

Excerpt from the statement by the Bank of Japan:

The Bank will purchase Japanese government bonds (JGBs) so that their amount outstanding will increase at an annual pace of about 50 trillion yen, and the average remaining maturity of the Bank's JGB purchases will be about seven years. 

The Bank will purchase exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs) so that their amounts outstanding will increase at an annual pace of about 1 trillion yen and about 30 billion yen respectively. 

As for CP and corporate bonds, the Bank will continue with those asset purchases until their amounts outstanding reach 2.2 trillion yen and 3.2 trillion yen respectively by end-2013; thereafter, it will maintain those amounts outstanding. 

With regard to the outlook, Japan's economy is expected to continue a moderate recovery as a trend, while it will be affected by the front-loaded increase and subsequent decline in demand prior to and after the consumption tax hike. The year-on-year rate of increase in the CPI is likely to rise for the time being. 

Regarding risks, there remains a high degree of uncertainty concerning Japan's economy, including the prospects for the European debt problem, developments in the emerging and commodity-exporting economies, and the pace of recovery in the U.S. economy.  

Bank of Japan Leaves Stimulus Program Unchanged


Bank of Japan | Joana Taborda | joana.taborda@tradingeconomics.com
12/20/2013 9:26:42 AM