Bank also details asset buys, moves up November meeting By Lisa Twaronite, MarketWatch TOKYO (MarketWatch) — The Bank of Japan’s policy board decided Thursday to leave its key overnight call rate unchanged, as widely expected, offered details of its asset-buying program and cut its growth outlooks. It also moved forward its next policy meeting to Nov. 4-5. The November meeting had previously been scheduled for Nov. 15-16. Those new dates put the meeting in the immediate wake of the U.S. Federal Open Market Committee meeting on Nov. 2-3. The FOMC is expected to announce new quantitative easing steps. But the Japanese central bank stated that the reason for the change was to discuss the principal terms and conditions for the purchases of exchange-traded funds and Japanese real-estate investment trusts, “with a view to promptly starting their purchases” under the asset-buying program it unveiled at its last meeting earlier this month. “The reason for the change of date was ostensibly so that the central bank could initiate its purchase program as soon as possible, but many market participants suspected that the BoJ wanted to remain flexible in response to any possible moves made by the Fed at its own meeting,” said Boris Schlossberg, director of currency research at GFT. Bank of Japan Gov. Masaaki Shirakawa told reporters after the meeting that the BoJ wasn’t considering overseas events when it decided to meet earlier. At its previous meeting, the BOJ surprised markets by cutting the unsecured overnight call loan rate to a range of 0%-0.1%, from 0.1% previously. See report on previous Bank of Japan meeting. Under the asset-buying program, the Bank of Japan said it will purchase corporate bonds rated BBB or higher and commercial paper rated a2 or higher. It said it will purchase 1.5 trillion yen ($18.36 billion) in long-term government bonds, and another ¥2 trillion in short-term government debt, under the previously announced ¥5-trillion scheme. The central bank will buy through the end of 2011, until the total asset balance is reached. Shirakawa told reporters that the total could be increased if necessary, which he also said after the program was unveiled. The bank cut its economic growth forecast for the current fiscal year through March 2011 to 2.1% from the 2.6% forecast it issued three months ago. Its latest semiannual outlook report on the economy and prices also predicted gross-domestic-product growth of 1.8% in the fiscal year through March 2012, down from its previous forecast of 1.9%. The bank held to its view that consumer prices in Japan will rise, but slowly. It expects core consumer prices to fall 0.4% this fiscal year, then rise 0.1% in the year through March 2012.

Source