Today the Bank of Japan just doubled a key bank loan program used to inject liquidity into its economy.Bloomberg:
Governor Masaaki Shirakawa and his board increased the three-month loan facility to 20 trillion yen ($222 billion), the bank said in a statement after its meeting in Tokyo. Miyako Suda and Tadao Noda opposed the decision. The board also held the overnight rate at 0.1 per cent by a unanimous vote.
Thus Japan is loosening monetary policy while essentially the entire world is tightening. It’s appearing as if the Bank of Japan has caved the intense political pressure.
Prime Minister Yukio Hatoyama’s administration, restrained from adding to fiscal stimulus by a record debt load, has been pushing the central bank to do more to bolster growth.
The credit expansion “could implant a strong impression among the government that the stronger it presses, the more it can get from the BOJ,” said Mitsuru Saito, chief economist at Tokai Tokyo Securities Co. The expansion “is highly unlikely to shore up the macro-economy, while having only a limited impact on liquidity,” he said.