Crank up the printing presses as Japan’s Prime Minster Shinzo Abe has his gopher over at Japan’s central bank, Haruhiko Kuroda, announce a huge $266bn fiscal stimulus for the economy this past Wednesday. Japan’s government figures on Friday morning underlined the scale of the problems facing Japan. Guess they call this “bold action” on the part of Japan’s central bank? More currency being injected into Japan’s and the world’s economy when manufacturing in Japan is stagnant. Where will an estimated US$15 billion a month being cranked out by Japan’s central bank go? Probably into the construction and concrete industry Japan to continue ringing Japan’s shoreline and waterways with more concrete. What’s been happening is that Japan’s central bank has been buying up corporate assets including corporate shares. Meanwhile, Japanese investors are becoming increasingly agitated moving to increased gold assets.
Bank of Japan blames Brexit as it renews monetary stimulus
Uncertainty caused by the UK vote and a wider global slowdown forced the bank to act, but yen rises as markets give muted response
The Bank of Japan has announced a modest expansion of its monetary easing programme, blaming Britain’s decision to leave the European Union as the biggest uncertainty facing world markets.
The central bank acknowledged government pressure for more action to drive the yen lower and help Japan’s legion of exporters, but stopped short of upping its bond purchases or cutting interest rates.
Instead the bank sanctioned an increase in purchases of exchange-traded funds as it attempted to accelerate inflation towards its 2% target.
The moves disappointed the markets, which had expected another big influx of liquidity. The Nikkei stock average yo-yoed wildly in the aftermath of the move before falling nearly 2% in afternoon trade.
Other stock markets in the region were also down while futures trading indicated the FTSE100 and Dow Jones would open slightly down on Friday morning.
The yen rose 2% against the US dollar, which will frustrate government attempts to devalue the stubbornly high currency.