BOJ Shows a Little Bit of Flexibility
Update – Maybe my initial assessment of the rate decision by the Bank of Japan was a trifle harsh.
While it is true that most of the 5 Trillion yen in additional quantitative easing will simply go to purchase Japanese Government Bonds (3.5 trillion yen) what is different is the decision to put aside 1.5 trillion yen to purchase a combination of commercial paper, exchange traded funds (I kid you not) and real estate investment trusts (again, I kid you not).
Clearly the BOJ is struggling to find a way to get maximum bang for its Yen without using too many Yen. The Tokyo stock market liked it (Hey – they have a new customer!) and in fact the Yen did weaken against many of its counterparts – at least a little.
Of course, the Yen strengthened against the US dollar – but this has to do with a market that is generally dollar bearish sine the FOMC officially announced that US inflation might actually be too low and they may need to do something about.