“The Bank of Japan made its strongest commitment yet to end two decades of stagnation, shifting to Federal Reserve-style open-ended asset purchases while disappointing investors by delaying the program until next year.
Governor Masaaki Shirakawa and six of nine board members voted for a 2 percent inflation target, to be achieved “at the earliest possible time” — a pace not sustained in Japan since the early 1990s. While judging that the economy is “relatively weak,” and that consumer prices will be flat for the time being, the BOJ refrained from adding immediate stimulus.
With a planned 13 trillion yen a month ($145 billion) in extra securities buying on hold until January 2014, the yen rose and stocks fell. The currency has slid and shares climbed the past 10 straight weeks in anticipation of the BOJ joining Prime Minister Shinzo Abe’s administration in strengthening measures to lift the economy out of its third recession in five years.
“What disappoints me was we can see the BOJ’s hesitance to step up monetary stimulus,” said Takahiro Sekido, a strategist in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd. who formerly worked at the Bank of Japan. (8301) “Abe will keep pressing the BOJ but today’s decisions indicate that Abe will probably wait for the next governor to make a significant shift in monetary policy….”
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