Minutes of BOJ’s January Meeting Show Officials are Open to Expanding Quantitative Easing Program Further
The minutes of Bank of Japan's January meeting was released on Friday, which indicated that the BOJ officials are open to extending the already massive quantitative easing program further.
The minutes revealed that officials are exploring further asset purchases and also introduction of negative rates. The bank is making an effort to fight deflation and the new insight will probably make expectations grow that the BOJ might adopt additional monetary stimulus soon using both the channels.
This week, BOJ governor, Haruhiko Kuroda indicated that the rates might go as low as minus 0.5 percent. According to the minutes of the meeting, the board members supporting the new policy mentioned that the rates might be further cut. However, the bank's decision to dive into negative territory driving interest rates down has hit the money-market funds. It further raised concerns regarding the profitability aspects of the banks and has also increased the worries of the lawmakers.
Referring to the asset purchase plans of the BOJ, Yasuhiro Takahashi, an economist at Nomura Securities Co. in Tokyo said, "The minutes reinforce a view that the next easing will be a combination of a rate cut and expansion of QQE. There wasn't much explanation why they didn't expand asset purchases in the minutes but I think that's probably because the debate would have been about the limits of QQE and they didn't want to draw attention to it."
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