“Whatever it Takes” Japanese Style
It’s a world truly gone mad.
In a surprise move today, the Bank of Japan announced further quantitative easing, dominated by long-term Japanese government bonds. The BoJ also announced it and would triple annual purchases of exchange traded funds and property investment trusts.
BoJ governor Haruhiko Kuroda defied objections from four fellow board members, arguing that a tax-hit economy and a lower oil price have led to “a critical moment” in the country’s bid to escape from deflation.
The Financial Times quotes Kuroda as follows: The extra action “shows our unwavering determination to end deflation. There was a risk that despite having made steady progress, we could face a delay in eradicating the public’s deflation mindset. This is a pretty drastic step, so I think there will be a significant effect [on the economy].”
Stunning Market Reaction
- Nikkei futures up lock limit (1160 points)
- S&P 500 up 1.0% (new all-time high)
- Yen plunges 2.5%
- Dollar rises 0.9%
- Gold sinks 2.75%
- Oil down 1.1%
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