Bank of Japan Considering Further Easing

The Bank of Japan is considering further easing its monetary grip for the second straight month at its meeting on Tuesday, amid fears the economic recovery in Japan is stalling, delaying an exit from chronic deflation, sources close to the matter said Thursday.

The rare move by the central bank, aimed at demonstrating its resolve to help bolster the economy and prices, is likely to center on expanding the size of its asset purchase program by 10 trillion yen to a total of 90 trillion yen.

The global economic slowdown and the adverse impact from the worsening ties between Japan and China following Japan’s nationalization in September of the Senkaku Islands, which are claimed by China and Taiwan, are raising concern about Japan’s economic recovery.

Whether to expand the program to allow further purchases of riskier assets, including exchange-traded funds, is also likely to be discussed at the central bank’s one-day Policy Board meeting, the sources said.

If the BOJ decides on further easing at the meeting, it would be the first time since April and May 2003 for the central bank to loosen monetary policy for a second consecutive month.

It would also be the first time for Governor Masaaki Shirakawa, who assumed the post in 2008, to implement additional easing measures for the second month in a row.

In its biannual economic outlook report to be compiled by the BOJ on Tuesday, the central bank will present for the first time its forecast for the core consumer price index excluding fresh food in the fiscal year starting April 2014.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza