BOJ mulling new monetary easing steps

New target for asset-buying, loan programs seen as stimulus


The Bank of Japan has started considering further monetary easing measures that could be adopted at its next Policy Board meeting Oct. 30, according to sources.

By easing monetary policy for the second straight month, the BOJ would step up joint efforts with the government to prevent a recession.

At the forthcoming meeting, the BOJ is expected to add to monetary stimulus by raising its target on the balance of its fund for asset-buying and special loan programs by ¥5 trillion to ¥10 trillion, the sources said.

The BOJ has not eased monetary policy for two months in a row since Gov. Masaaki Shirakawa took over as chief of the central bank in April 2008.

Last month, the BOJ downgraded its basic economic view in light of slowdowns in overseas economies and decided to raise the target on the fund by ¥10 trillion, updating the goal to ¥80 trillion. The BOJ currently aims to reach the target by the end of 2013.

Since September, Japan’s economic outlook has become more bleak, partly due to the tensions with China over the sovereignty of the Senkaku Islands.

At its next policy meeting, the BOJ will revise downward its projections on the economy and prices for fiscal 2012 and fiscal 2013 in its Outlook for Economic Activity and Prices report.

In the report, the BOJ will also announce its economic and price projections for fiscal 2014.

At the next meeting, the BOJ is likely to decide to increase its purchases of long-term government bonds under the asset-buying program to push up interest rates on the market further, the sources said.

The central bank is also expected to consider boosting its purchases of exchange-traded funds and real estate investment trust funds through the program, they said.

Inflation less than 1%


The Bank of Japan is expected to forecast that consumer prices will rise less than 1 percent year-on-year in fiscal 2014 due to a downward trend in the domestic economy affected by the worldwide slowdown, sources said Thursday.

Because overcoming deflation may take longer than expected, the central bank will consider further easing its monetary policy at its Policy Board meeting Oct. 30, the sources said.

The BOJ is likely to say in its biannual economic outlook report to be adopted at the policy meeting that the annual change in the core consumer price index, which removes the effects of an expected sales tax rise, will be in a positive range in the upper half of zero percent, they said.

The BOJ had indicated it had hoped for a 1 percent annual rate of increase in the CPI as early as by the end of fiscal year ending March 2015.