BOJ keeps base money target, expands range of assets it buys

[TOKYO] The Bank of Japan maintained its base money target under its massive stimulus programme on Friday but decided to expand the range of assets it purchases, a move aimed at encouraging firms to spend more on wages and investment.

The central bank kept intact its policy target of increasing base money - or cash and deposits in circulation - at an annual pace of 80 trillion yen (S$928.3 billion) via aggressive buying of government bonds, exchange-traded funds (ETFs) and trust funds investing in property.

In addition to such purchases, the BOJ decided to set aside 300 billion yen to buy ETFs that specifically target shares of companies actively pursuing capital expenditure.

With its massive purchases already drying up liquidity in the Japanese government bond (JGB) market, the central bank will also extend the maturity of JGBs it buys to 12 years from next year so it can continue buying up bonds.

"Companies and households are shifting away from their deflationary mindset under our quantitative and qualitative easing (QQE) programme," the BOJ said in a statement announcing the decision. "There are many companies that are actively spending on capital expenditure and human resources. We hope such moves broaden further. From this standpoint, the new measures are aimed at supplementing QQE," it said.

BOJ Governor Haruhiko Kuroda will hold a news conference at 3.30pm (0630 GMT) to explain the policy decision.

REUTERS