Bloomberg- The Bank of Japan expanded its asset-purchase program for the second time in two months, a move that failed to cheer investors as stocks slumped amid mounting evidence that the economy contracted last quarter.
e fund will increase by 11 trillion yen ($138 billion) to 66 trillion yen while a separate credit loan program will stay at 25 trillion yen, the bank said in Tokyo, acting hours after data showed the biggest decline in industrial output since last year’s earthquake. The BOJ will also offer unlimited loans to banks to boost credit demand.
The Nikkei 225 Stock Average closed 1 percent lower and the yen strengthened as faltering exports and waning domestic demand bolster the case for more easing in coming months after the bank forecast it will miss its inflation target in the next two fiscal years. Economy Minister Seiji Maehara attended his second BOJ meeting today and, in a joint statement with Governor Masaaki Shirakawa, said that the government “strongly expects” powerful easing until deflation is overcome.
“The easing hasn’t ended,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management. “It’s possible that the BOJ will next ease around January,” when it reviews its price and growth forecasts released today, he said.
All but one of 27 economists surveyed by Bloomberg News had predicted easing today, with the majority expecting a 10 trillion yen expansion. The bank expanded its asset-purchase fund by 10 trillion yen on Sept. 19, making today the first time since May 2003 that it has loosened twice in two months.