"They've been very smart, getting the government not to change the BOJ law without doing anything that dramatically different"
- Neale Vincent, strategist at Nomura Securities
The amount of domestic currency in circulation and current account deposits held at the Bank of Japan rose in January compared to that in the same month last year, indicating that the expansion of asset-purchase programme and other bold actions done by Shinzo Abe are starting to have an effect on the economy and may result in a revival of economic activity. According to the BoJ report on Monday, the Japanese monetary base stood at 131.920 trillion yen in the recording period and added 10.9%, after an 11.8% leap in April. The report also showed that the number of banknotes in circulation was up 3.2% year-on-year, while coins in circulation added 0.6% from a year ago. As the BoJ is forced by the government to take more actions in order to revive the economy, the increase in the monetary base can be widely expected.
"They've been very smart, getting the government not to change the BOJ law without doing anything that dramatically different," said Neale Vincent, strategist at Nomura Securities in Tokyo.
"Abe seems to be quite happy with the new inflation target, so I don't think he will pressure the BOJ into acting again next month. But there could be one more easing by April," said Izuru Kato, chief economist at Totan Research Institute in Tokyo.
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