Bank of Japan release the world's most intense burst of monetary stimulus on Thursday promised to inject about $ 1.4 trillion U.S. dollars (929.3 billion pounds) to the economy in less than two years time, a radical gamble send Yen reeling and bond yields to record lows.
Haruhiko Kuroda, the new governor of the Bank of Japan (Haruhiko Kuroda) is committed to the open-ended asset purchases and the base currency will nearly double, to 270 trillion yen (1.92 trillion pounds) in shock therapy by the end of 2014 to end two decades of stagnation.
U.S. Federal Reserve Board in accordance with its policy of quantitative easing may buy more debt, but the size of the United States about one-third of Japan's economy, "quantitative and qualitative easing monetary" Kuroda range is unparalleled.
"Loose monetary policy, which is an unprecedented degree," smiling Kuroda told him at the helm of the central bank policy meeting news conference.
"We take all available steps, we can think of, I believe, today, to take all necessary measures in order to achieve the inflation rate of 2% within two years," he said.
These steps, give up the interest rate target, to become the only major central bank monetary base as the main target - the amount of cash, it pumps out of the economy. 2001-2006, adopted a similar policy, but not at this scale.
In fact, changes in the scope Kuroda push him to ensure that the unanimous support of the Board of Directors, to promote the yen fell sharply, knocked the 10-year bond yield hit a record low, nudged Tokyo stock price just shy of 4-1 / 2 years closing high.
"The result is regime change," HSBC (LSE: HSBA.L - News) Japan economist the spring, Devalier in a report said.
"The Bank of Japan is now more determined commitment to achieve its inflation target of 2%, and has indicated that it will do anything in the purchase of foreign bonds, in order to achieve this goal."
Kuroda overhaul Japanese market provides immediate comfort, but contains the main risk.
It allows the central bank to withstand the government debt and potentially huge losses if it did not lead to inflation, investors lost confidence in the efforts to revive the economy, and other Asian exporting countries seeking to remain competitive, it may lead to currency war yen weakness.
"This is because if we have to return to 2000's quantitative easing monetary policy, said:" In Tokyo Sumitomo Mitsui Asset Management Company Muto, a senior economist Hiroaki.
"The positioning of the base currency will be a substantial increase in the current account balance is maintained at the central bank, commercial banks, but I still do not know if the money through the economy."
The monetary base, or cash, central bank reserves have reached a record in March, but the huge pile of money and not an end to deflation or raise wages.
The perfect answer
Kuroda meeting since he took office on March 20 policy is seen as a big test of his ability to lead the Bank of Japan to unorthodox measures to meet the inflation target adopted in January, the market likes them seeing things.
Government bond futures soared, the benchmark 10-year bond yield hit 0.425%, the lowest ever. Yen, has climbed run meeting, plummeted to promote the U.S. dollar more than 2% of 95.25 yen about 92.90 before the decision.
The Nikkei stock index more than 2% of realized losses to end 2.2%, slightly lower than the end of January 4-1/2 high hit.
Japan's central bank will buy 7.5 trillion yen in long-term government bonds, a month, about 70% of the bonds sold in the market. It combines two bond purchase plan, asset purchase and loan schemes and "rinban" market-oriented operation, to buy longer-term government bonds, including 40 years time.
The central bank will also be increased by 1 trillion yen to 3 billion yen annually Real Estate Investment Trust (REIT), the annual purchase exchange-traded fund (ETF).
RBS Securities chief Japan economist Junko Nishioka said, "I can say that in the market expected the Bank of Japan came up with a perfect answer.
"Kuroda made a good number and type of assets to promote monetary easing, the bank purchased his promise."
Kuroda said the Bank of Japan hopes enough to push down bond yields, investors started buying riskier assets, such as property and stocks, and to enable families and businesses to spend now, rather than later expected prices.
The central bank capped its holdings of government bonds temporarily scrapped the value of the currency notes, self-imposed rules, even though doing so may fine-tune the monetization of public debt - directly underwrite government loans to keep some of the Board members.
Kuroda poke, the Bank of Japan will have extra money printing sowed the seeds of future asset price bubbles, which is a concern repeatedly mentioned his predecessor.
"I do not see a sudden surge in long-term interest rates created the risk of asset price bubbles," Kuroda said.
 



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