BOJ reportedly eyeing further monetary easing

Kyodo

The Bank of Japan may ease monetary policy for a second straight month at its Policy Board meeting Tuesday amid fears the postdisaster-related economic upswing is stalling, threatening to prolong the country’s deflationary spiral, sources said.

In what would be a rare move, the BOJ is likely to focus on expanding its asset purchase program by ¥10 trillion to ¥90 trillion in total to demonstrate its resolve to bolster the economy and reverse years of deflation, the sources said Thursday.

The one-day Policy Board meeting is also expected to discuss whether to expand the program to allow the purchase of riskier assets, including exchange-traded funds, they added.

It would be the first time the central bank has loosened monetary policy for two months in a row since April and May 2003, as well as the first occasion BOJ Gov. Masaaki Shirakawa has implemented additional easing measures for a second consecutive month since assuming the post in 2008.

In its biannual economic outlook report to be compiled Tuesday, the BOJ will present a forecast for the core consumer price index, excluding fresh food, for the fiscal year starting in April 2014 — another first.

The report is expected to predict the annual change in the core CPI will be in a range above 0.5 percent — less than the central bank’s goal of a 1 percent year-on-year increase — once the probably adverse effects on consumer demand from the government’s envisioned sales tax hike are factored in.

On Sept. 19, the BOJ decided to expand its asset purchase program by ¥10 trillion to ¥80 trillion to bolster the economy, but stopped short of increasing purchases of riskier assets. It refrained from taking additional measures at its last meeting, held Oct. 4-5.