BoJ expands asset-buying program by $ 119 billion



AGENCE FRANCE PRESSE

Published — Friday 21 December 2012

Last update 20 December 2012 10:45 pm

| نسخة PDF Print News | A A

TOKYO: The Bank of Japan yesterday ramped up its offensive to power the world's third-largest economy as it faces heavy pressure from the country's incoming government to loosen monetary policy.
The move to expand an asset-buying program — its main policy tool — by 10 trillion yen ($ 119 billion) to 101 trillion yen came days after the conservative Liberal Democratic Party won a weekend election promising to boost spending and pressure the central bank for aggressive action.
The BoJ's last scheduled meeting of the year had been widely seen as a test of its resilience to outside pressure.
The soon-to-be ruling party's strongarm tactics may have played a role in the BoJ's latest easing since the government has the power to appoint senior bank officials, said Keiji Kanda, economist at Daiwa Institute of Research.
"Even though the BoJ should be independent from politics, it cannot ignore political pressure completely," he said.
"The bank is reflecting the LDP's intentions in its policies, which could be interpreted as the bank giving in to pressure from the political side."
Yesterday's decision marked the BoJ policy board's third major move since September after its counterparts in Europe and the US ushered in huge measures to battle slowing growth.
The BoJ gave few indications it was bowing to demands from the new powers in Tokyo, citing a slowing global economy and making no direct mention of a two-percent inflation target demanded by incoming Prime Minister Shinzo Abe.
The bank kept interest rates unchanged at between zero and 0.1 percent and said it would look at reviewing its inflation target.
"Overseas economies remain in a deceleration phase," said a bank statement, repeating its view the economy would remain weak "for the time being".
The BoJ "judged it appropriate to undertake further aggressive monetary easing policies", it added.
Bank chief Masaaki Shirakawa later told a Tokyo press briefing his decision to review the BoJ's inflation goals had followed earlier discussions with Abe.
"The role the government should play in monetary policy needs to be discussed at length," Shirakawa added.
But he dismissed as incorrect earlier reports — quoting Abe — which said the bank chief called Japan's next premier Thursday morning to inform him of the BoJ's policy decisions before they were publicly announced.

Abe met with Shirakawa at the LDP's headquarters earlier this week, reportedly calling on him to strike a policy deal with the government.
There has been tension between the two on policy issues, with Abe saying he wants to replace Shirakawa with a more like-minded governor when his term ends in April.
During the election campaign, the hawkish Abe criticized the bank for not doing more to stoke Japan's economy — which may have slipped into a recession in the third quarter — and advocated "unlimited" easing measures, drawing a mixed response from economists.
The BoJ's quarterly Tankan survey last week showed confidence among Japanese manufacturers has hit a near three-year low in the final months of 2012, further stoking fears about the country's prospects.
The bank in October said it would expand the asset-buying scheme by 11 trillion yen to 91 trillion yen in a bid to kickstart growth as Japan's recovery from last year's quake-tsunami disaster stuttered.
Yesterday, the BoJ also said a previously announced bank lending program would likely top 15 trillion yen in cheap loans.
However, some analysts have questioned the success of previous BoJ measures to boost an economy beset by a strong yen, tumbling demand in the key European market, and little room to grow domestic demand.
The cheap loans program "should further reduce the cost of credit, although the constraint on lending appears to be a lack of demand for credit rather than problems with the cost or availability of credit supply," Capital Economics said in a note this week.

What's happening around Saudi Arabia

Custodian of the Two Holy Mosques King Salman prays inside the historic Quba Mosque in Madinah. The king was accompanied by Prince Muqrin, Sheikh Abdul Rahman Al-Sudais, head of the Presidency of the Two Holy Mosques and Prince Sultan bin Salman, ch...
JEDDAH: Shop rentals at certain malls have risen by 200 percent, with this cost likely to be passed on to the consumer, the Jeddah Chamber of Commerce and Industry (JCCI) said here recently. Muhammad Al-Shehri, chairman of the JCCI’s textiles and gar...
JEDDAH: People with special needs can now visit a park that has dedicated services for them.Jeddah Mayor Hani Abu Ras opened Al-Erada Park in Al-Salama district on Prince Sultan Street on Thursday.“The Kingdom provides special care for people with di...
JEDDAH: Is involvement in social media the right thing or wrong, particularly in the month of Ramadan? There is a difference of opinion with some arguing that it eats into the time that should be spent praying while some backing it for its religious...
RIYADH: The Argentine government has thanked the Kingdom for previously hosting its Umrah pilgrims for free.“They were part of a group invited by then Custodian of the Two Holy Mosques King Abdullah,” said Ambassador Jaime Sergio Cerda on Thursday.“T...
RIYADH: The Ministry of Education’s counseling department has approved the Rifq Program for the physical and psychological well-being of students.Nabil Mohammad Al-Budair, director of counseling for boys, said the program aims to reduce violence in p...
RIYADH: Sales of fireworks at public markets and main roads in Riyadh have increased during Ramadan, despite the Ministry of Commerce and Industry announcing a SR5,000 reward for anyone providing information about warehouses storing these dangerous i...
RIYADH: The General Organization for Social Insurance (GOSI) has reported that there were 69,241 work-related accidents in 2014, with expatriates making up 65,509 or 94.6 percent and Saudis 3,732.The accidents were in nine sectors with building and c...
JEDDAH: The Health Ministry’s expenditures over the past five years increased from SR29.29 billion to SR53.73 billion, an increase of about 83 percent.According to a study detailing the ministry’s expenditures between 2008 and 2012 issued by the mini...
RIYADH: Five people from the southern Indian state of Kerala were killed in a road accident at Salwa near Dammam in the Eastern Province early Thursday morning.Manoj Kumar, community welfare attache at the Indian Embassy, told Arab News that the vict...
MAKKAH: The government has deployed eight helicopters over Makkah to track the movement of vehicles and people, and assist in security tasks and medical evacuations.Maj. Gen. Mohammad Al-Harbi, commander of the Interior Ministry’s aviation security d...
JAZAN: A Yemeni woman (A.M.) has once again experienced freedom and a renewed sense of hope in life after reuniting with her family last week on her release from Jazan General Prison, where she spent six years on charges of murder of a citizen in the...
RIYADH: A delegation from the Kingdom recently visited the United Arab Emirates (UAE) to explore that country’s successful experience in tourism, in a bid to further develop the sector. Saudi Arabia has been making all-out efforts to promote tourism,...
RIYADH: The Justice Ministry has appointed 1,145 candidates for jobs in the judiciary and urged them to complete the requirements for their final appointment. The candidates in the sixth and fourth ranks are requested to fulfill employment prerequisi...
JEDDAH: Four thousand Djibouti workers are expected to arrive in the Kingdom over the next few months following the labor pact signed between the two countries last month.Speaking to a local publication recently, Djibouti Ambassador Diaa Eddin Saeed...

Stay Connected

Facebook