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BOJ expands record asset purchases

Not so long ago, the Bank of Japan shocked financial markets by imposing a negative rate. Now, the country’s key financial institution offers another weird option – the BOJ is willing to expand record asset purchases.     

This week, Haruhiko Kuroda, the bank’s governor stressed that the rate could tumble as low as -0.5%, and all of the board members, backing up the new monetary policy told it could be reduced further and it was included in the minutes. The BOJ’s verdict to follow the EU’s central banks right into negative territory has brought down interest rates in this Asian country. It also hurt money-market funds and powered worries regarding bank profitability.       

As follows from the BOJ’s minutes, the next easing measure is expected to be a combination of a rate decrease as well as expansion of QQE. However, there wasn’t a clear explanation why they the BOJ officials didn’t mention the newly offered option in their minutes. Perhaps, the only explanation of this strange attitude is that the debate would have been devoted to the limits of QQE, so they were reluctant to draw much attention to this nuance.  

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