BOJ refuses to implement easing monetary policy further

The Bank of Japan held off on easing monetary policy on Tuesday after last month’s surprise loosening, but board member Ryuzo Miyao unsuccessfully proposed a further easing by increasing the bank’s asset-buying and loan scheme by 5 trillion yen ($61 billion).

The central bank expanded a separate loan scheme targeting growth industries by 2 trillion yen, to 5.5 trillion yen, and incorporated several new loan arrangements including one that will tap its dollar reserves to offer investments and loans denominated in foreign currencies.

As widely expected, it maintained its key policy rate at a range of zero to 0.1 percent by a unanimous vote.
Governor Masaaki Shirakawa will hold an embargoed news conference with his comments expected to come out sometime after 4:15 p.m. (0715 GMT), Reuters reported.

The central bank surprised markets last month by boosting its asset-buying scheme by 10 trillion yen and setting a 1 percent inflation goal, signaling a more aggressive monetary easing stance to beat deflation. The asset-buying scheme, which stands at 65 trillion yen, is the BOJ’s direct, short-term monetary policy tool to push down one- to two-year bond yields and risk premiums by purchasing government bonds and private debt such as corporate bonds, commercial paper and trust funds investing in property and stocks. It serves as a near-term monetary stimulus tool.

Aside from the asset-buying scheme, the BOJ has place the loan scheme to encourage banks to fund prospective growth industries as a long-term effort to boost the economy’s potential growth.