2012-10-31

Bank of Japan (BOJ) - expand its quantitative easing program by ¥11 trillion

The price of gold continued to hold near $1,710 per ounce for the second straight day as U.S. financial markets remained closed due to the impact of Hurricane Sandy.  The spot gold price did advance, however, from an overnight low of $1,705.34 to as high as $1,715.69 earlier this morning before parings its gains. The rise in gold prices was driven in part by the Bank of Japan (BOJ), which announced plans to expand its quantitative easing program by ¥11 trillion, or approximately $139 billion, to ¥91 trillion.  The increase was roughly in-line with the level economists were expecting.

The Japanese central bank will also establish a new loan program to provide banks with unlimited amounts of cheap, long-term funding.  In addition, the BOJ took a page out of the Federal Reserve’s book by committing to maintain its easing measures until inflation in Japan climbed to at least 1.0%.
BOJ Governor Masaaki Shirakawa noted that escalating risks of a global recession impacted the central banks’ decision to launch the latest accommodative monetary policies.  In comments following the BOJ’s meeting, Shirakawa stated that “We were aware of the global slowdown in September. But developments since then have shown that the slowdown was in fact deepening.”

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