Japan's monetary base increases for 6th straight month, hits record high in May

Japan's monetary base increased in May to a new record-high marking the sixth successive month of increase as ongoing liquidity has started to aid inflation efforts, the Bank of Japan (BOJ) said in a report on Thursday.

According to the central bank's latest data, the monetary base stood at 386.73 trillion yen (3.5 trillion U.S. dollars), up almost 26 percent on year, as of the end of May.

The Bank of Japan has been battling to reverse decades of deflationary pressure that has mired the world's third-largest economy with a number of aggressive qualitative and quantitative easing measures, including the bank, in its latest move, plunging its interest rate into negative territory.

The BOJ opted for this measure to dissuade businesses from parking their holdings with the central bank, with the new negative rate imposed to encourage firms to releases more funds and hence liquidity back into the market.

The bank's data showed Thursday that the balance of financial institutions' current account deposits, which comprises the largest portion of the entire monetary base, rose 34.6 percent in the recording period, totaling 286.78 trillion yen.

The BOJ has continued with its policy of targeting an increase to the monetary base at an annual pace of around 80 trillion yen.

Japan's monetary base refers to the amount of currency that is either circulated in the hands of people living in Japan or in domestic commercial bank deposits held in the central bank's reserves.

This measure of the money supply typically only includes the most liquid currencies and the Japanese administration maintains a measure of control over the monetary base by buying and selling government bonds in the open market.

The central bank's recent easing of monetary policies has, of late, aided an ongoing increase in Japan's monetary base, as evidenced by Thursday's figures. Endit