Japan Central Bank Opts for Modest Stimulus Expansion

The Russian ruble is down by 0.2% at 66.7436 after the Central Bank of Russia held rates unchanged at 10.50%, as most were expecting.

Such concerns may be addressed when the BOJ conducts an assessment of the effect of its current policies at its next rate review on September 20-21. He added, “The central bank was probably better off not doing anything”. Japan’s Economy Minister had lobbied for more BOJ action in the wake of Prime Minister Shinzo Abe’s announcement of a bigger-than-expected ¥28 trillion stimulus package on Wednesday. “But on the other hand, they don’t want to be in the corner of directly financing government debt”.

The expansion of the dollar lending program to $24 billion, and a new program started to lend some of the BOJ’s bonds to financial institutions, was meant to increase access to supplies of the US currency.

It is set for a 1.2 percent gain for the week, and 5.7 percent for the month.

The index tracking Japanese banking stocks closed up 6.9%. China’s Shanghai Composite Index slipped 0.1 percent to 2,992.34. Economists had predicted it would remain unchanged.

BOJ board members updated their economic projections at this week’s meeting.

Because Friday’s measures were small compared to market expectations, traders may interpret Friday’s policies as a sign that the BOJ was running out of ammunition, said Kohei Iwahara, economist at Natixis Japan Securities. There were multiple CPI releases in terms of the Tokyo core CPI and the National core CPI.

It was frankly one of the most anticipated BoJ policy meetings in years and the resounding thud of the announcement was not lost on us.

He stressed that there was still more room to deepen negative rates or expand bond purchases.

Anglo American said on Thursday net debt had fallen and that an aggressive cost-cutting and asset sale strategy was on track, although volatile commodity markets could make the second half of the year challenging. Still, So said the BOJ’s modest moves were “surprising”. There’s about 7 trillion yen of new spending included, according to a person familiar with the matter, who didn’t specify the time frame for the outlays.

“The Government is undertaking fiscal and structural policy initiatives, including a large scale “stimulus package, ‘ which is now being compiled”.

The yen jumped 3.05 per cent against the dollar, whose decline put the trade-weighted dollar exchange rate on course for its biggest weekly fall in two months. The data also showed continuing tightness in a labor market influenced by the country’s shrinking population. It also found inflation edged up modestly to 0.2 percent in the year to July and unemployment holding steady at 10.1 percent in June. Some analysts say the review may lead to more radical steps being proposed.