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BoJ steps up JGB purchases - BNP Paribas

FXStreet (Łódź) - BNP Paribas economist Raymond Van der Putten looks at BoJ's unexpected monetary policy decision today to accelerate JGB purchases by JPY30 trillion per annum to about JPY 80 trillion.

Key quotes

" Also purchases of Exchange Traded Funds and Japanese real estate investment trust will be increased so that their amount outstanding will rise at an annual pace of about JPY 3 trillion and about JPY 90 billion, respectively."

"The decision was taken with only 5 out of the 9 Policy Board members voting in favour. This is rather exceptional, as decision taking is normally quite consensual."

"The Bank argues that the deflationary mind-set that plagued the country for such a long-time could return because of weak demand following April’s VAT hike and the substantial decline in crude oil prices. The BoJ probably assumes that the expansion of QQE will weaken the currency and push up energy prices, which will be quickly translated into higher energy prices."

"At the same time, the authorities concede that lower energy prices might have positive effect on economic activity in the medium-term."

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