BoJ expands stimulus for second straight month, cuts growth outlook
2012-10-30 10:33:07
The Bank of Japan expanded its asset purchase program for the second straight month to prevent the economy from sliding into recession, amid risks of persistent deflation. The bank also trimmed its growth outlook, as overseas economies moved deeper into a deceleration phase.
The Policy Board governed by Masaaki Shirakawa on Tuesday lifted the size of asset purchase program to about JPY 91 trillion from JPY 80 trillion. The bank intends to complete the increased purchases by the end of 2013.
An amount of JPY 10 trillion will be utilized to buy government bonds and treasury discount bills and the remaining JPY 1 trillion for commercial papers, corporate bonds, exchange-traded funds and real estate investment trusts.
The asset purchase target now stands at JPY 66 trillion, up from JPY 55 trillion, and the credit facility remains unchanged at JPY 25 trillion. The central bank last expanded the stimulus in September by adding JPY 10 trillion to overall asset purchase program.
Also, the bank decided to provide cheap long-term loans to financial institutions without upper limit.
The BoJ today said it judged 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.
In a unanimous vote, the board decided to retain the benchmark overnight uncollateralized call rate at 0-0.1 percent.
The bank trimmed real growth outlook for fiscal 2013 to 1.6 percent from 1.7 percent and this year's estimate sharply down to 1.5 percent from 2.2 percent.
In the latest issue of the Outlook for Economic Activity and Prices, the bank pushed back its hopes of hitting inflation target. The consumer price index (all items less fresh food) is now forecast to fall 0.1 percent in fiscal 2012 compared to the prior estimate of 0.2 percent rise.
For fiscal 2013, consumer prices are projected to increase 0.4 percent compared to July's 0.7 percent growth estimate. In fiscal 2014, the economy is projected to expand 0.6 percent and inflation is seen at 2.8 percent.