Bank of Japan Enhances Monetary Easing

At the Monetary Policy Meeting held on October 30, the Policy Board of the Bank of Japan decided, by a unanimous vote, to encourage the uncollateralized overnight call rate to remain at around 0 to 0.1 percent while at the same time enhancing monetary easing.

The Policy Board of the Bank of Japan made the following decisions with a view to further pursuing aggressive monetary easing: Increase in the total size of the Asset purchase Program from about 80 trillion yen to about 91 trillion yen; Establishment of the Framework for the Fund-Provisioning Measure to Stimulate Bank Lending; The uncollateralized overnight call rate to remain at around 0 to 0.1 percent.

Extracts from the Statement on Monetary Policy

Overseas economies have moved deeper into a deceleration phase. In global financial markets, while investors' risk aversion on the back of the European debt problem has abated somewhat, particular attention should be given to developments in these markets. Under such circumstances, exports and industrial production have decreased, starting to affect domestic demand which has remained firm thus far. Meanwhile, the year-on-year rate of change in the CPI (all items less fresh food) is around 0 percent.

Going forward, there remains a high degree of uncertainty concerning Japan's economy, including the prospects for the European debt problem, the momentum toward recovery for the U.S. economy, the possibility of emerging and commodity-exporting economies making a smooth transition to the sustainable growth path, and the spreading effects of the recent bilateral relationship between Japan and China. Furthermore, attention should continue to be paid to the effects of financial and foreign exchange market developments on economic activity and prices.

Based on these economic and price developments, the Bank of Japan judged it appropriate to undertake further aggressive monetary easing policies in order to prevent Japan's economy from deviating from the path of returning to a sustainable growth path with price stability., Bank of Japan
10/30/2012 10:00:54 AM