Investors across the region were apparently expecting a more aggressive stimulus program.
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It also plans a “comprehensive assessment” of the impact of the bank’s monetary easing on the economy, citing “considerable uncertainty” over the outlook for prices and global markets. Japan’s economy minister lobbied for more BOJ action in the wake of Prime Minister Shinzo Abe’s announcement of a bigger-than-expected 28 trillion yen stimulus package on Wednesday. The euro gained 0.3 percent to $1.1097 and another currency whose central bank has been acting aggressively, the Swiss franc, 0.6 percent to 0.9747 francs per dollar.
“The government is now studying and arranging comprehensive and drastic economic measures”, Aso said.
The day’s turnover was about 3,296.7 billion yen (around 31.77 billion US dollars).
But the BOJ maintained its base money target at 80 trillion yen, as well as keeping to the existing pace of purchasing other assets including Japanese government bonds.
The BOJ also doubled the size of a USA dollar lending program to support Japanese companies’ operations overseas, to $24 billion.
The BOJ also kept negative interest rates unchanged at minus 0.1 percent.
The BOJ doubled its purchases of exchange-traded funds, yielding to pressure from the government and financial markets for bolder action, but the move still disappointed investors who sought more audacious measures.
The dollar fell more than a full yen on Friday at one point to as low as 102.825 and the Nikkei average tumbled almost 2 percent, after the BOJ’s decision fell short of expectations.
CURRENCIES: In currencies, the dollar fell to 104.53 yen. The dollar fell 1.8 percent to 103.35 yen JPY= , its biggest one-day decline since June 24 – the day after the UK’s decision to leave the European Union – having earlier fallen below 103.00.
Financials led the way, with the euro zone banking index up more than 3 percent .SX7E and on track for a rise of 9 percent for July, its best month since February past year. But tightness in the job market has not spilled into significant increases in wages that might help spur more consumer demand and encourage businesses to investment in the short of “virtuous cycle” Abe has been promising since he took office in late 2012.
Stocks in Japan absorbed the BOJ’s decision a little more easily, in part because the central bank increased purchases of exchange-traded funds in its easing package. Japan reported further signs of weakness in its economy in June, with industrial output and consumer spending falling from the year before.
Gov. Haruhiko Kuroda led his board in voting to expand an ETF program to 6 trillion yen ($58 billion) a year, the BOJ said in a statement in Tokyo Friday.
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The yen jumped on Friday and Japanese government bond yields rose the most in eight years, lifting global sovereign borrowing costs, after the Bank of Japan’s latest steps to boost growth and inflation fell short of investor expectations.
