Unprecedented stimulus measures of the BOJ will inject $ 1.4 trillion into the economy

According to Reuters, the Japanese monetary stimulus on Thursday focused on the outbreak of the commitment of the central bank in less than two years to $ 1.4 trillion into the economy of funds, the radical bet triggered the yen exchange rate sharply lower, bond yields drop to a record low.

Bank of Japan to end two decades of economic stagnation, shock therapy, Haruhiko Kuroda commitment to the Bank of Japan will implement the to open asset purchase and the Monetary Base at the end of 2014 will be almost doubled to $ 2.9 trillion.

Fed quantitative easing project to buy bonds or more, but taking into account the scale of Japan's economy is only about one-third of the United States, Kuroda "quantitative plus qualitative monetary easing" unrivaled in size.

Kuroda smiling at the subsequent press conference, said: "This unprecedented degree of monetary easing."

He said: "We take all available measures that we can think of and I am confident to achieve the inflation target of 2% within two years, we have exhausted all the necessary measures."

One of the measures is to give up interest rates as a policy target, the Bank of Japan to become the only major central banks of the world will be the primary target of the monetary base, the size of the cash into the economy. The bank had adopted a similar policy in 2001-2006, but the scale is far better than this.


Kuroda breadth of policy adjustments, and ensure that the unanimous support of the Council to the fact that significantly push down the yen, the 10-year bond yields fell to a record low, but also help the stock market closed near the four-and-a-half years hit a new high.

The HSBC economists Izumi Devalier, wrote in a research report: "The results constitute a mechanism for change."

Kuroda policy substantially modified instantly to appease the Japanese stock market, but contains major risk.

The policy will enable the Bank of Japan is huge exposure to government debt, if the measures fail to push high-pass [microblogging] inflation, investors lost confidence in their ability to revive the economy, the central bank will face potentially huge losses and, at the same time may lead to currency war, because other Asian exporting countries seek to remain competitive in the weakening of the yen.

In Tokyo, a senior economist at Sumitomo Mitsui Asset Management Company, said Hiroaki Muto: "as if we are back to the 2000s, the period of quantitative easing."

Target base set as a goal will significantly expand the commercial banks in the current account of the balance sheet of the Bank of Japan, but I'm not sure whether these funds will flow to the economy. "

Cash and reserves of the monetary base, the Bank of Japan, in March hit a record high, but such a large-scale money is not the end of deflation or boost salaries.


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