Japan: Further Monetary Easing

September 19th, 2012
in econ_news

Econintersect:   The easing race continues as the Bank of Japan (BoJ) just breaking-news-130pxannounced further quantitative easing (QE).  The BoJ increased its asset-purchase program to 80 trillion yen from 70 trillion yen.  The monetary easing move amounted to an increase $127 billion at the current exchange rate of 79 Yen to the dollar.  The move came as a surprise to many, although there had been a few calls for this sort of move from a very few observers in recent days.

Follow up:

The increased easing was likely prompted by the recent slashing of the second quarter GDP estimate for Japan from 1.4% of 0.7% (annual rates), reported by GEI News.

From an article by APF on Google News:

In its statement Wednesday the BoJ warned "the pick-up in economic activity has come to a pause" in Japan due to the slowing overseas economies.

"There remains a high degree of uncertainty about the global economy, including the prospects for the European debt problem, the momentum toward recovery for the US economy," it said.

"Attention should be given to developments" in global financial markets amid long-lagging European debt problems, it said.

Japan has been a "gentle practitioner" of quantitative easing compared to the U.S.  The BOJ’s balance sheet has expanded 42 percent since September 2008 when Lehman Brothers  collapsed. The Fed’s total assets have tripled during that period with $2.35 trillion in purchases .

The BOJ has bought assets worth about $1.42 trillion since November 2008 through its purchases of government debt and the asset-purchase program.  Both the Fed and the BoJ currently have balance sheets in excess of $3 trillion.  With the announcement of QE3 it appears the Fed will easily win the race to $4 trillion.

John Lounsbury


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