The Bank of Japan’s (BoJ) unprecedented monetary stimulus is increasingly being felt around Asia, with the central bank’s liquidity set to provide an important buffer against the Federal Reserve’s impending tightening, says HSBC.
“With inflation [in Japan] still far from target, we expect the BoJ to keep financial conditions extraordinarily loose for some time. Asia will increasingly feel the impact of Japanese capital,” Izumi Devalier, economist at HSBC wrote in a report.
In April 2013, the central bank launched an aggressive easing program to pull the world’s third largest economy out of two decades of deflation and sluggish growth. It has since been injecting $60-80 billion per month into the financial system via purchases of Japanese government bonds (JGBs) and risk assets.
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