BoJ pledges to steadily buy as­sets, pro­vide liq­uid­ity

The Pak Banker - - Front Page -

TOKYO: The Bank of Ja­pan (BoJ) said it will "steadily" pro­vide liq­uid­ity to sup­port de­mand and Gover­nor Masaaki Shi­rakawa warned about the risks a climb in bond yields posed to the nation's ex­pan­sion.

"Volatile long-term rates can af­fect the econ­omy, prices and fi­nan­cial con­di­tions by in­flu­enc­ing bor­row­ing costs for house­holds and com­pa­nies," Shi­rakawa told re­porters in Tokyo to­day af­ter the cen­tral bank left its credit pro­grams un­changed and kept the key in­ter­est rate be­tween zero and 0.1 per­cent.

The BoJ's pur­chases of real-es­tate in­vest­ment trusts and ex­change traded funds have bol­stered stock prices, a sign the stim­u­lus has sup­ported sen­ti­ment even as global growth slows. At the same time, an in­crease in bond yields sug­gests that higher in­ter­est rates may threaten the eco­nomic out­look and com­pel the BoJ to do more.

"Short-term rates are too high," said Shuichi Obata, se­nior econ­o­mist at No­mura Se­cu­ri­ties Co. in Tokyo. "The BoJ should pro­vide am­ple funds through money mar­ket op­er­a­tions to rein in gains in the short-term rates."

The rate de­ci­sion was by a unan­i­mous vote, as ex­pected by all 16 econ­o­mists sur­veyed by Bloomberg News. The BoJ left the size of its as­set-buy­ing fund at 5 tril­lion yen ($60 bil­lion) and the credit pro­gram at 30 tril­lion yen.

"The bank will steadily pur­chase var­i­ous fi­nan­cial as­sets and pro­vide longer-term funds" so that "the ef­fects of com­pre­hen­sive mon­e­tary eas­ing spread," the BoJ said in a state­ment in Tokyo to­day.

Yields on Ja­pan's two-year govern­ment bonds and bench­mark 10-year bonds have climbed this quar­ter, set­ting the stage for the biggest quar­terly in­creases since the April-June pe­riod of 2008. -PB News

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