Bank of Japan policymakers divided on shock stimulus

clock

Bank of Japan board members were divided on the central bank's decision to unleash surprise stimulus measures at the end of October, minutes of their meeting have revealed.

Four out of nine policymakers opposed the decision to step up annual government bond purchases from Y50trn to Y80trn. Their concerns included the limited additional impact of further stimulus and the impact of a declining yen on small businesses.

However, the argument for more stimulus ultimately prevailed, with five members voting for the move.

They were led by Governor Haruhiko Kuroda, who has acted as a strong ally for Prime Minister Shinzo Abe's three-pronged 'Abenomics' economic rejuvenation programme.

Factors in favour of action included the need to prevent "a deflationary mindset" as oil prices fell.

"They stated that, to pre-empt manifestation of such risk and to maintain the improving momentum of expectation formation, the Bank should decide additional monetary easing at this time," noted the minutes.

In the event, the Bank of Japan's surprise stimulus sent the Nikkei soaring and caused the yen to plummet. But just two weeks later, data revealed Japan had slid back into recession.

More on Investment

Partner Insight: Why high-yield investors should keep a close eye on the default cycle

Partner Insight: Why high-yield investors should keep a close eye on the default cycle

Alex King, CFA, Investment Strategy Analyst @ Wellington Management
clock 19 February 2024 • 5 min read
Partner Insight: Navigating new opportunities in commodities

Partner Insight: Navigating new opportunities in commodities

A unique investment opportunity is in the making as we move from the coal and oil-centred story of the last century to the renewable, clean energy chapter of the future. Watch the discussion to learn more.

Sarka Halas
clock 15 February 2024 • 1 min read
'The recession that did not happen': How investors should be positioned for 2024

'The recession that did not happen': How investors should be positioned for 2024

Wellington co-head of investment strategy

Natasha Brook-Walters
clock 06 February 2024 • 4 min read
Trustpilot