Japan boosts buying bonds, ECB to follow
Güncelleme Tarihi:
Reuters
Oluşturulma Tarihi: Mart 19, 2009 00:00
TOKYO/ PARIS - Japan's central bank moved to pump money into the country's sclerotic economy yesterday, while European Central Bank President Jean-Claude Trichet said the ECB was ready to take additional measures in tackling global economic crisis, but suggested a recovery could be in sight.
"The year 2009 will be very, very difficult," Trichet told Europe 1 radio. "At the same time, there is quite general agreement between all public and private institutions that 2010 may be the year of moderate recovery in growth."
Japanese government bonds and the Nikkei closed up after the central bank decision on bond purchases, which economists said would help Prime Minister Taro Aso's cabinet finance a planned additional fiscal stimulus, by underpinning demand for government debt.
A general strengthening of equity markets, albeit at very low levels, comes as world political leaders prepare for a G20 summit to help coordinate programs to overcome the crisis. Japan's leadership has been accused of sluggishness in intervening to revive money supply to feed industry and trade.
But the Bank of Japan surprised markets by raising annual government bond purchases by 29 percent to a record $219 billion to "smooth market operations", more than analysts had expected and announcing the move sooner than many had anticipated.
Buying gov’t debt
"Today's announcement shows the BoJ is doing more than what the markets expected to strengthen monetary easing," said Junko Nishioka, chief Japan economist at RBS.
While the Bank of Japan has been buying government debt for decades, other central banks have only started considering such an operation after pushing interest rates near to zero.
The Bank of England started buying government bonds with newly created money on March 11 and the Federal Reserve has mentioned such a scheme as one of the unconventional steps it could take in the face of the worst global downturn since the 1930s.
Few analysts expect the U.S. central bank to adopt such a scheme this week, but speculation it may suggest going that route in the future propped up U.S. Treasuries.
Most Fed watchers expect the central bank to vow to do whatever is necessary to pull the world's biggest economy out of a painful recession while keeping its benchmark rate steady at 0-0.25 percent and holding off on any new steps.
Federal Reserve optimistic
The Fed has said the economy can start recovering next year if the authorities succeed in pulling through the complex and costly clean-up of the shattered financial sector.
Countries around the globe are striving to shore up banks' capital and limit the impact of toxic assets while rolling out massive stimulus packages.
Many investors pin their hopes on China, seen as best placed among major world economies to spend its way out of its slowdown and help kick-start much of Asia in the process.
But the World Bank warned Beijing yesterday that it would thwart its medium-term goals of rebalancing the economy towards more consumption if it further boosted investment for the sake of a short-term growth spurt.
The World Bank, which cut China's 2009 growth forecast to 6.5 percent from 7.5 percent in November, also said that although China has been hit hard by the global meltdown, its banks have been largely unscathed.
Japanese government bonds and the Nikkei closed up after the central bank decision on bond purchases, which economists said would help Prime Minister Taro Aso's cabinet finance a planned additional fiscal stimulus, by underpinning demand for government debt.
A general strengthening of equity markets, albeit at very low levels, comes as world political leaders prepare for a G20 summit to help coordinate programs to overcome the crisis. Japan's leadership has been accused of sluggishness in intervening to revive money supply to feed industry and trade.
But the Bank of Japan surprised markets by raising annual government bond purchases by 29 percent to a record $219 billion to "smooth market operations", more than analysts had expected and announcing the move sooner than many had anticipated.
Buying gov’t debt
"Today's announcement shows the BoJ is doing more than what the markets expected to strengthen monetary easing," said Junko Nishioka, chief Japan economist at RBS.
While the Bank of Japan has been buying government debt for decades, other central banks have only started considering such an operation after pushing interest rates near to zero.
The Bank of England started buying government bonds with newly created money on March 11 and the Federal Reserve has mentioned such a scheme as one of the unconventional steps it could take in the face of the worst global downturn since the 1930s.
Few analysts expect the U.S. central bank to adopt such a scheme this week, but speculation it may suggest going that route in the future propped up U.S. Treasuries.
Most Fed watchers expect the central bank to vow to do whatever is necessary to pull the world's biggest economy out of a painful recession while keeping its benchmark rate steady at 0-0.25 percent and holding off on any new steps.
Federal Reserve optimistic
The Fed has said the economy can start recovering next year if the authorities succeed in pulling through the complex and costly clean-up of the shattered financial sector.
Countries around the globe are striving to shore up banks' capital and limit the impact of toxic assets while rolling out massive stimulus packages.
Many investors pin their hopes on China, seen as best placed among major world economies to spend its way out of its slowdown and help kick-start much of Asia in the process.
But the World Bank warned Beijing yesterday that it would thwart its medium-term goals of rebalancing the economy towards more consumption if it further boosted investment for the sake of a short-term growth spurt.
The World Bank, which cut China's 2009 growth forecast to 6.5 percent from 7.5 percent in November, also said that although China has been hit hard by the global meltdown, its banks have been largely unscathed.