"The outcome itself isn't that impressive in my view, but stocks started rising rather sharply"
- Michiyoshi Kato, senior vice president at foreign exchange sales at Mizuho Bank
Japan's central bank offered no surprises to markets this time, leaving its unprecedented stimulus programme unchanged ahead of a looming tax hike a couple of months later, while decided to extend its loan programmes that were due to expire soon.
The Japanese Yen lost more than 0.70% on Tuesday, easing to 102.60 against the U.S. Dollar, while versus the Pound and Euro the currency lost 0.83% and 0.73% respectively. At the same time, Nikkei Stock Average rocketed 3.1%. As it was widely anticipated, the BoJ decided to keep its monetary policy on track by continuing to conduct asset purchases to the amount of 60-70 trillion Yen annually in attempt to boost inflation up to 2% and finally end decade-long bout of deflation. Haruhiko Kuroda and his team announced the doubling of its funding tool to 7 trillion yen, saying private banks will be able to borrow twice as much low-interest money as earlier under a second facility. The expansion of the central bank's loan programme is not a monetary easing per se. These programs are supplementary measures that are designed to help the cash being injected through the central bank's main stimulus programme to circulate throughout the economy. It is important to mention that the size of the enlargements of lending incentives highly overwhelmed analysts' expectations, meaning that more stimulus can be introduced soon.
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