The remarks suggest the earlier-than-expected announcement of Abe’s economic package was an attempt by the government to pressure the BOJ into expanding stimulus at a two-day rate review ending on Friday. The central bank is also introducing a facility to enable banks to obtain dollar funding with government securities pledged as collateral.
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The Bank of Japan ended a policy meeting on Friday by announcing it will expand purchases of assets from financial institutions to help inject more cash into the economy and pursue its 2 percent inflation target.
Traders were expecting either a big move by the BoJ or a total disappointment – overnight saw the most volatile yen trading since the financial crisis of 2008. “On the other hand an unexpectedly aggressive stimulus involving helicopter money would be well received by stock markets”.
The Dow Jones industrial average rose 52 points, or 0.3 percent, to 18,525 as of 10:04 a.m. Eastern.
“With underlying inflation set to moderate further toward the end of the year, we think that the bank will still have to provide more easing before too long”, Marcel Thieliant of Capital Economics said in an analysis.
It also doubled the size of a US dollar lending program to support Japanese companies’ operations overseas, to $24 billion.
The government and the Bank of Japan must work together to support the economy, the country’s economy minister was quoted as saying by Japanese media in the wake of premier Shinzo Abe’s announcement of a bigger-than-expected fiscal spending package.
Japan revealed a surprisingly large 28 trillion yen or $265 billion, economic stimulus package on Wednesday, surpassing estimates for a 20 trillion yen package, reports Herbert Lash for Reuters.
The central bank justified Friday’s monetary easing as aimed at preventing external headwinds, such as weak emerging market demand and Britain’s vote to leave the European Union, from hurting business and household confidence.
The central bank did not change the interest it charges on policy-rate balances it holds for commercial banks, which is now at a record low minus 0.1%.
Meanwhile, the benchmark Nikkei 225 index closed down -1.13 percent at 16,476.84, and the broader Topix index closed lower 1.11 percent to 1,307 points.
The yen gained on Thursday on speculation that the Bank of Japan won’t deliver radical stimulus this week, while the dollar took a step back after the U.S. Federal Reserve stopped short of signalling a near-term rate rise.
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London stocks rose 0.5 percent as data showed the British economy grew by 0.6 percent in the second quarter, after 0.4 percent expansion in the previous three months, despite Brexit fears.
