“This shows the ceiling for monetary policy”.
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Japan’s Nikkei .N225 , which swung in and out of the red after the announcement, closed up 0.56 percent at 16,569 points.
Uncertainty over the path of interest rates has held gold in check since it rallied to more than two-year highs in the wake of Britain’s shock vote last month to leave the European Union.
Government figures published on Friday morning did little to soothe those worries.
United States crude futures fell to as low as $40.75 per barrel and were last down 0.9 per cent at $40.77.
Investors also digested a heavy slew of European corporate earnings dominated by some of the region’s biggest banks and awaited the first estimate of second-quarter USA growth.
At the two-day rate review that ended on Friday, the BoJ chose to increase ETF purchases so as to increase its total holding at an annual pace of 6 trillion yen ($58 billion), up from the current 3.3 trillion yen.
It also said it would launch a “comprehensive assessment” of its own growth policies, without giving details. The index, which touched a seven-week high last week, rose 6.4 percent in July, its best month since October past year. Under this lending programme, the BoJ provides its U.S. dollar funds for a period of up to 4 years to support Japanese firms’ overseas activities through financial institutions. The BOJ also left its key interest rate unchanged from Feburary’s negative point one percent to spur lending and investment.
The government, now preparing a 28 trillion yen stimulus package, has been pressuring the central bank to lend a hand.
Japan’s central bank posted a meager increase in purchases of exchange-traded funds (ETFs) at the conclusion of its policy meeting today, but kept its base money goal at 80 trillion yen and the pace of other asset purchases.
“It seems that the BOJ is near the monetary boundaries”, said Birgit Figge, a fixed-income strategist at DZ Bank AG in Frankfurt.
The decision disappointed markets’ expectations for a stimulus package of nearly 28 trillion yen as pledged by Prime Minister Shinzo Abe this Wednesday to support the economy.
But analysts questioned how much of it was immediate fresh spending, and the government has so far offered few specific details.
Japan’s spend-for-growth policies have set it apart from some of its rich nation counterparts, including Germany which has been reluctant to endorse them, seeing it as an ineffective way to stimulate the economy.
The government recently downgraded its growth forecast for 2016 to 0.9 percent from 1.7 percent, and speculation had mounted over the possibility for a so-called “helicopter money” approach that would entail more direct infusions of money into the economy.
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The central bank was under heavy pressure to act after earlier this week Prime Minister Shinzo Abe announced 28 trillion yen ($267 billion) in spending initiatives to help support the sagging economic recovery.
