Thursday, November 1, 2012

Bank of Japan Increases Asset Purchases

From the BOJ:

The Bank decided to increase the total size of the Program by about 11 trillion yen, from about 80 trillion yen to about 91 trillion yen in order to make financial conditions for such economic entities as firms and households even more accommodative by further encouraging a decline in longer-term market interest rates and a reduction in risk premiums. The increase in the size of respective assets under the Program is as follows, and the Bank intends to complete the increased purchases by around end-2013 (see Attachment 1 for an overview of the Program).

Japanese government bonds (JGBs): about 5 trillion yen
Treasury discount bills (T-Bills): about 5 trillion yen
CP: about 0.1 trillion yen
Corporate bonds: about 0.3 trillion yen
Exchange-traded funds (ETFs): about 0.5 trillion yen
Japan real estate investment trusts (J-REITs): about 0.01 trillion yen

In addition:

The Bank decided to provide long-term funds -- up to the amount equivalent to the net increase in lending -- at a low interest rate to financial institutions at their request, with the view to promoting their aggressive action and helping increase proactive credit demand of firms and households. There shall be no upper limit -- unlimited -- to the total amount of funds provided by the Bank under this facility.

As always, lack of inflation is what is killing the Japanese economy: