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After all the hype and expectation around the potential use of “helicopter money”, the Bank of Japan has delivered just a slight tweak to Japanese monetary policy by voting to increase the amount of exchange traded funds it buys to an annual pace 6 trillion yen from the previous level of 3.3 trillion Yen.

It has left the amount of Japanese government bonds static at an annual rate of 80 trillion Yen and left rates unchanged at -0.1%.

The BoJ said in its statement accompanying the decision that given Brexit, the slowdown in emerging economies, and uncertainties around offshore growth, the increased measures – which it characterised as an “enhancement of monetary easing” – were necessary to “prevent these uncertainties from leading to a deterioration in business confidence and consumer sentiment as well as ensure smooth funding in foreign currencies by Japanese firms and financial institutions”.

Aside from the ETF buying the bank said it would also “increase the size of its lending program to support growth in US dollars to 24 billion USD” (about 2.5 trillion yen; double the previous size of 12 billion USD).

These measures provide funds to Japanese firms’ overseas activities.

Rather than conduct outright “helicopter money” the bank said that it would support the government’s stimulus initiatives by keeping monetary policy accommodative.

The Government is undertaking fiscal and structural policy initiatives, including a large scale ‘stimulus package’, which is currently being compiled. The bank will pursue ‘Quantitative and Qualitative monetary Easing (QQE) with a negative Interest Rate’ including measures decided today to provide highly accommodative financial conditions.

The bank said the inflation outlook was roughly unchanged for the year ahead and also 2018, while it expects the Japanese economy to expand moderately from its initial estimates.

This is a disappointment to the market and the Yen is surging again with USDJPY down around 200 points from the days open at 103.36. On stocks the Nikkei has traded a wide range in the wake of the announcement and is currently down 0.82%.

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