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Roundup: Japan's central bank to further expand monetary easing

Xinhua, July 29, 2016 Adjust font size:

Japan's central bank on Friday decided to further expand monetary easing to support economic recovery and avoid any possible negative impact from Britain's vote to leave the European Union.

The Bank of Japan (BOJ) said after a two-day policy meeting that it will purchase exchange-traded funds "so that their amount outstanding will increase at an annual pace of about 6 trillion yen (58.1 billion U.S. dollars)," almost doubling the previous pace of about 3.3 trillion yen.

"The Bank of Japan will conduct money market operations so that the monetary base will increase at an annual pace of about 80 trillion yen (774.2 billion U.S. dollars)," said the central bank.

In addition, the BOJ decided "to continue applying a negative interest rate of minus 0.1 percent to the Policy-Rate Balances in current accounts held by financial institutions at the Bank."

The BOJ will also increase the size of its lending program to support growth in U.S. dollars to 24 billion U.S. dollars, doubling the previous size of 12 billion U.S. dollars.

"Under this lending program, the bank provides its U.S. dollars funds for a period of up to 4 years to support Japanese firms' overseas activities through financial institutions," it said.

Meanwhile, the central bank will pursue "Quantitative and Qualitative Monetary Easing (QQE) with a Negative Interest Rate" including measures decided Friday and provide highly accommodative financial conditions.

The BOJ expected in its outlook report that the Japanese economy would expand 1.0 percent in fiscal 2016 (April 1,2016-March 31, 2017) and 1.3 percent in fiscal 2017, compared with growth of 1.2 percent and 0.1 percent projected earlier.

Moreover, the central bank cut down its inflation outlook, expecting consumer prices to rise 0.1 percent in fiscal 2016, lower than a 0.5 percent increase forecast in April. It kept its inflation outlook for fiscal 2017 at an increase of 1.7 percent.

Despite the central bank's current inflation target of 2 percent, Japan has seen a negative inflation for four months in a row.

Japan's core consumer price dropped 0.5 percent in June from a year before, posting the biggest decline since March 2013.

The Japanese government on Wednesday pledged to compile a stimulus package of more than 28 trillion yen (271 billion U.S. dollars) in a bid to shore up the world's third-largest economy which is stuck in deflation. Endit