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Friday, Oct. 28, 2011
BOJ ups asset purchase program by ¥5 trillion
By JUN HONGO
The Bank of Japan on Thursday eased its monetary policy, boosting the size of its asset purchase program by another ¥5 trillion, raising its total funds to ¥55 trillion, citing the current instability in global financial markets and economies, as well as the yen's relentless rise.
The monetary easing was agreed by an 8 to 1 majority vote at the BOJ Policy Board, which also unanimously agreed to maintain the key interest rate at around zero to 0.1 percent.
"Care is necessary because of the risk that the economic and price outlook will deteriorate further depending on developments in global financial markets and overseas economies," the BOJ said in a statement following the Policy Board's one-day meeting.
The BOJ "deemed it necessary to further enhance monetary easing so as to ensure a successful transition to a sustainable growth path with price stability," it said.
On Thursday, the central bank also issued its biannual economic outlook report, which cut its projected gross domestic product growth in fiscal 2011 from 0.4 to 0.3 percent, citing the negative impact of the surging yen and the gloomy outlook for the global economy. The BOJ also downgraded its GDP growth forecast for fiscal 2012 from 2.9 to 2.2 percent, and predicted growth of 1.5 percent in fiscal 2013.
Speculation had been rife that the BOJ and the government could work in tandem Thursday to tackle the yen's alarming rise in the currency markets.
The yen hit a record high of 75.70 to the dollar Wednesday, and has hovered around the ¥76 line all week. Some pundits predicted the Finance Ministry would intervene for the first time since August to halt the alarming trend that has already damaged Japan's exporters and industries, which are also recovering from the March 11 disasters.
"We are prepared to take firm measures," Finance Minister Jun Azumi told reporters before the BOJ's decision to pump more cash into the market.
The central bank said the ¥5 trillion expansion of its asset purchase program would be used to buy long-term Japanese government bonds. The last time the BOJ ploughed more funds into the program was in August.