BoJ Unveils Aggressive Monetary Easing Measures
The Bank of Japan on Thursday announced decisive stimulus measures aimed at ending 15 years of deflation in the country as Governor Haruhiko Kuroda kept his promise of embarking on aggressive monetary easing at his first Policy Board meeting.
The Board decided to merge its asset purchase program with the regular monthly bond purchases. Under the new plan, the central bank purchases of the Japanese Government Bonds (JGB) will amount to around JPY 7 trillion per month.
The Board said that the BoJ will purchase JGBs so that their amount outstanding will increase at an annual pace of about JPY 50 trillion. This is expected to encourage a further decline in interest rates across the yield curve.
The average maturity of the bank's JGB's will be extended to seven years from slightly less than three years at present. JGBs with all maturities including 40-year bonds will be made eligible for purchase, the central bank said in a statement.
The Board decided to change the main operating target for money market operations to the monetary base from the benchmark uncollaterilized overnight call rate, which was kept unchanged at 0-0.1 percent.
The monetary base will now increase at an annual pace of about JPY 60-70 trillion. Further, the central bank temporarily suspended the banknote principle.
BoJ also set a time horizon of about two years for attaining 2 percent inflation target.
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