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The
Bank of Japan (BoJ) concluded its two-day meeting with additional monetary
easing, directionally in-line with the consensus majority and our
expectations. But the breadth of the new BoJ announcement
today--concentrated on the expansion of exchange-traded funds (ETFs) to
“about” JPY6tn annually from around JPY3.3tn previously (with a 7-2
majority)--was less extensive than consensus expectations. The
decision to maintain the current pace of Japanese government bond (JGB)
purchases at roughly JPY80tn and preserve the annual accumulation rate in
Japan real estate investment trusts (J-REITs) at around JPY90bn, however,
did not astound us. But the decision to leave the policy rate
unchanged at -0.1% (with the same majority vote of 7-2 as in prior meetings)
was a surprising outcome. The other details on the new “enhancement
of monetary easing” from the BoJ, which consist of enlarging the US Dollar
loan program (to $24bn from $12bn) and introducing a new securities lending
facility, seem generally inclined toward potential market liquidity and
funding risks along with fostering improved market functioning…
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