A Bloomberg survey conducted from July 15 to 22 found that 32 out of 41 analysts forecast that the BOJ will expand monetary stimulus – the highest percentage of respondents in any poll in over the last three years.
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The bank has been buying assets like exchange-traded funds (ETFs), but already holds around a third of Japan’s market for government bonds (JGBs). But the central bank did not match expectations. Banks will also benefit from the increased dollar lending facility.
The Japanese government unveiled a surprisingly large 28 trillion yen ($267.58 billion) stimulus package on Wednesday but sources told Reuters on Thursday that the government package contains direct fiscal spending of only 7 trillion yen, also likely to disappoint investors.
“Gold has been signaling, before Brexit, central banks are running out of options to help stimulate the economy”, said Quincy Krosby, market strategist at Prudential Financial, referring to the British vote in June to leave the European Union.
The BoJ (Bank of Japan) gave its economic outlook after the monetary policy meeting on July 29, 2016.
“It is hard to understand why the BOJ did not ease more aggressively today”, said Masaaki Kanno of JPMorgan in Tokyo.
“Japan’s economy may see the pace of recovery slow for a while due to some weakness in exports and output”, Kuroda said.
“The government is now studying and arranging comprehensive and drastic economic measures”, Aso said.
The bank said it would increase its exchange-traded fund purchases to an annual pace 6 trillion yen, up from its previous pace of 3.3 trillion yen. One fifth of that is earmarked for companies that meet benchmarks for investing in staffing and equipment, it said in a statement. It also announced measures to “ensure smooth funding in foreign currencies” by Japanese companies and financial institutions by increasing the size of the bank’s lending program to support growth in USA dollars. It also left untouched the minus 0.1 percent rate for a portion of commercial banks’ reserves.
In a month rife with speculation that Japanese authorities were readying to move towards outright “helicopter money” drops of cash to consumers, the yen has been more volatile than at any time since the 2008 financial crisis.
The Nikkei stock fell almost 2 per cent in afternoon trade.
The lack of quantitative easing did boost the yen, with the currency rising by as much as 2.5% against the US dollar Friday in Asia trade and gaining 2.9% for the week.
Meanwhile, the British pound tumbled to more than 3 decades low against the U.S. dollar earlier in July in the aftermath of the Brexit vote, which clouded the UK’s economic outlook and increased bets on the central bank policy actions.
Platinum rose 0.5 per cent at $1,133.75 an ounce and was on track for its best month since January 2012, with a more than 11 per cent growth this month.
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Barclays shares were up 5 percent even though first-half profits fell 21 percent, and UBS shares were up 3 percent despite a 14.5 percent fall in second-quarter profit.
